v3.26.3
Education Loans (Tables)
 9 Months Ended
Sep. 30, 2026
Receivables [Abstract]  
Schedule of Loans Carried under Fair Value Option

The table below details the loans carried on our balance sheet under the fair value option as of September 30, 2026:

(Dollars in millions)

 

September 30, 2026

 

Unpaid principal balance

 

$

224

 

Purchased premium

 

 

—

 

Cumulative fair value adjustments

 

 

11

 

Total fair value of loans(1)

 

$

235

 

 

(1)
Accrued interest receivable of $2 million is recorded in Other Assets on the balance sheet. There are no loans that are 90 days or more delinquent.
Schedule of Carrying Value of Private Education Loans

Carrying Value of Private Education Loans as of September 30, 2026

 

(Dollars in millions)

 

Private Education Loans at Amortized Cost

 

 

Private Education Loans at Fair Value

 

 

Private Education Loans Held for Sale

 

 

Total Private Education Loans

 

Principal

 

$

12,959

 

 

$

224

 

 

$

2,481

 

 

$

15,664

 

Premium/(Discount)

 

 

20

 

 

 

—

 

 

 

(21

)

 

 

(1

)

Allowance for loan losses

 

 

(299

)

 

 

—

 

 

 

—

 

 

 

(299

)

Fair value adjustments (1)

 

 

—

 

 

 

11

 

 

 

(121

)

 

 

(110

)

Carrying value on balance
   sheet

 

$

12,680

 

 

$

235

 

 

$

2,339

 

 

$

15,254

 

 

(1)
Loans held for sale are carried at the lower of fair value and amortized cost and loans at fair value are carried at fair value. The $121 million fair value adjustment in connection with the held for sale portfolio represents the write-off related to the $1.4 billion of Legacy Private Education Loans that were classified as held for sale as of September 30, 2026. When loans are first classified as held for sale, if the fair value is lower than the carrying value then the expected losses related to credit are first recorded as provision for loan losses and the allowance for loan losses associated with those items is written off, establishing a new cost basis

 

4. Allowance for Loan Losses – Education Loans

Allowance for Loan Losses Roll Forward

 

 

Three Months Ended September 30,

 

 

 

2026

 

 

2025

 

(Dollars in millions)

 

Private
Education
Loans

 

 

FFELP
Loans

 

 

Total

 

 

Private
Education
Loans

 

 

FFELP
Loans

 

 

Total

 

Beginning balance

 

$

263

 

 

$

163

 

 

$

426

 

 

$

348

 

 

$

182

 

 

$

530

 

Total provision

 

 

210

 

 

 

13

 

 

 

223

 

 

 

155

 

 

 

13

 

 

 

168

 

Charge-offs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Gross charge-offs

 

 

(68

)

 

 

(11

)

 

 

(79

)

 

 

(112

)

 

 

(9

)

 

 

(121

)

   Expected future recoveries on current period
      gross charge-offs

 

 

9

 

 

 

—

 

 

 

9

 

 

 

16

 

 

 

—

 

 

 

16

 

Net charge-offs(1)

 

 

(59

)

 

 

(11

)

 

 

(70

)

 

 

(96

)

 

 

(9

)

 

 

(105

)

Write off in connection with classification of loans
   as held for sale(2)

 

 

(121

)

 

 

—

 

 

 

(121

)

 

 

—

 

 

 

—

 

 

 

—

 

Decrease in expected future recoveries on
  previously fully charged-off loans(3)

 

 

6

 

 

 

—

 

 

 

6

 

 

 

(1

)

 

 

—

 

 

 

(1

)

Allowance at end of period

 

$

299

 

 

$

165

 

 

$

464

 

 

$

406

 

 

$

186

 

 

$

592

 

Net charge-offs as a percentage of average loans
  in repayment(4)

 

 

1.49

%

 

 

.20

%

 

 

 

 

 

2.50

%

 

 

.15

%

 

 

 

Ending total loans(4)

 

$

12,979

 

 

$

26,063

 

 

 

 

 

$

15,862

 

 

$

29,138

 

 

 

 

Average loans in repayment(4)

 

$

12,613

 

 

$

22,022

 

 

 

 

 

$

15,259

 

 

$

24,527

 

 

 

 

Ending loans in repayment (4)

 

$

12,519

 

 

$

21,872

 

 

 

 

 

$

15,221

 

 

$

24,136

 

 

 

 

 

(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)
Three months ended September 30, 2026 includes $121 million of write-offs related to $1.4 billion of Legacy Private Education Loans that were classified as held for sale as of September 30, 2026. When loans are first classified as held for sale, if the fair value is lower than the carrying value then the expected losses related to credit are first recorded as provision for loan losses and the allowance for loan losses associated with those items is written off, establishing a new cost basis.
(3)
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.

 

 

Three Months Ended September 30,

 

(Dollars in millions)

 

2026

 

 

2025

 

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

 

$

163

 

 

$

172

 

Expected future recoveries of current period defaults

 

 

9

 

 

 

16

 

Recoveries (cash collected)

 

 

(9

)

 

 

(9

)

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

 

 

(6

)

 

 

(6

)

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

 

$

157

 

 

$

173

 

Change in balance during period

 

$

(6

)

 

$

1

 
(4)
Third-quarter 2026 excludes $2.4 billion of Private Education Loans that were classified as held for sale as of September 30, 2026 and $235 million of In-School Education Loans carried at fair value, and their corresponding charge-offs.

 

 

4. Allowance for Loan Losses – Education Loans (Continued)

Allowance for Loan Losses Roll Forward

 

 

Nine Months Ended September 30,

 

 

 

2026

 

 

2025

 

(Dollars in millions)

 

Private
Education
Loans

 

 

FFELP
Loans

 

 

Total

 

 

Private
Education
Loans

 

 

FFELP
Loans

 

 

Total

 

Beginning balance

 

$

364

 

 

$

173

 

 

$

537

 

 

$

441

 

 

$

180

 

 

$

621

 

Total provision

 

 

245

 

 

 

30

 

 

 

275

 

 

 

207

 

 

 

29

 

 

 

236

 

Charge-offs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Gross charge-offs

 

 

(233

)

 

 

(38

)

 

 

(271

)

 

 

(287

)

 

 

(23

)

 

 

(310

)

   Expected future recoveries on current period
      gross charge-offs

 

 

31

 

 

 

—

 

 

 

31

 

 

 

39

 

 

 

—

 

 

 

39

 

Net charge-offs(1)

 

 

(202

)

 

 

(38

)

 

 

(240

)

 

 

(248

)

 

 

(23

)

 

 

(271

)

Write off in connection with classification of loans
   as held for sale(2)

 

 

(121

)

 

 

—

 

 

 

(121

)

 

 

 

 

 

 

 

 

 

Decrease in expected future recoveries on
  previously fully charged-off loans(3)

 

 

13

 

 

 

—

 

 

 

13

 

 

 

6

 

 

 

—

 

 

 

6

 

Allowance at end of period

 

$

299

 

 

$

165

 

 

$

464

 

 

$

406

 

 

$

186

 

 

$

592

 

Net charge-offs as a percentage of average loans
  in repayment(4)

 

 

1.65

%

 

 

.23

%

 

 

 

 

 

2.16

%

 

 

.13

%

 

 

 

Ending total loans(4)

 

$

12,979

 

 

$

26,063

 

 

 

 

 

$

15,862

 

 

$

29,138

 

 

 

 

Average loans in repayment(4)

 

$

12,450

 

 

$

22,571

 

 

 

 

 

$

15,368

 

 

$

25,036

 

 

 

 

Ending loans in repayment (4)

 

$

12,519

 

 

$

21,872

 

 

 

 

 

$

15,221

 

 

$

24,136

 

 

 

 

 

(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)
Nine months ended September 30, 2026 includes $121 million of write-offs related to $1.4 billion of Legacy Private Education Loans that were classified as held for sale as of September 30, 2026. When loans are first classified as held for sale, if the fair value is lower than the carrying value then the expected losses related to credit are first recorded as provision for loan losses and the allowance for loan losses associated with those items is written off, establishing a new cost basis.
(3)
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.

 

 

 

Nine Months Ended September 30,

 

(Dollars in millions)

 

2026

 

 

2025

 

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

 

$

170

 

 

$

179

 

Expected future recoveries of current period defaults

 

 

31

 

 

 

39

 

Recoveries (cash collected)

 

 

(29

)

 

 

(30

)

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

 

 

(15

)

 

 

(15

)

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

 

$

157

 

 

$

173

 

Change in balance during period

 

$

(13

)

 

$

(6

)
(4)
Nine months ended September 30, 2026 excludes $2.4 billion of Private Education Loans that were classified as held for sale as of September 30, 2026 and $235 million of In-School Education Loans carried at fair value, and their corresponding charge-offs.

4. Allowance for Loan Losses – Education Loans (Continued)

Private Education Loans

The key credit quality indicators are credit scores (FICO scores), loan status, loan seasoning, certain loan modifications, the existence of a cosigner and school type. The FICO score is the higher of the borrower or co-borrower score and is updated at least every six months while school type is assessed at origination. The other Private Education Loan key quality indicators are updated quarterly.

 

 

Private Education Loan Credit Quality Indicators by Origination Year

 

 

 

September 30, 2026

 

(Dollars in millions)

 

2026

 

 

2025

 

 

2024

 

 

2023

 

 

2022

 

 

Prior

 

 

Total

 

 

% of Total

 

Credit Quality
   Indicators

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FICO Scores:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

640 and above

 

$

2,249

 

 

$

1,481

 

 

$

586

 

 

$

295

 

 

$

762

 

 

$

6,253

 

 

$

11,626

 

 

 

90

%

Below 640

 

 

14

 

 

 

34

 

 

 

45

 

 

 

32

 

 

 

87

 

 

 

1,141

 

 

 

1,353

 

 

 

10

 

Total

 

$

2,263

 

 

$

1,515

 

 

$

631

 

 

$

327

 

 

$

849

 

 

$

7,394

 

 

$

12,979

 

 

 

100

%

Loan Status:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In-school/grace/
   deferment/forbearance

 

$

60

 

 

$

51

 

 

$

35

 

 

$

18

 

 

$

33

 

 

$

263

 

 

$

460

 

 

 

4

%

Current/90 days or
   less delinquent

 

 

2,201

 

 

 

1,458

 

 

 

590

 

 

 

302

 

 

 

804

 

 

 

6,890

 

 

 

12,245

 

 

 

94

 

Greater than 90 days
   delinquent

 

 

2

 

 

 

6

 

 

 

6

 

 

 

7

 

 

 

12

 

 

 

241

 

 

 

274

 

 

 

2

 

Total

 

$

2,263

 

 

$

1,515

 

 

$

631

 

 

$

327

 

 

$

849

 

 

$

7,394

 

 

$

12,979

 

 

 

100

%

Seasoning(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1-12 payments

 

$

2,224

 

 

$

756

 

 

$

14

 

 

$

4

 

 

$

3

 

 

$

17

 

 

$

3,018

 

 

 

23

%

13-24 payments

 

 

—

 

 

 

735

 

 

 

328

 

 

 

17

 

 

 

12

 

 

 

31

 

 

 

1,123

 

 

 

8

 

25-36 payments

 

 

—

 

 

 

—

 

 

 

271

 

 

 

162

 

 

 

36

 

 

 

69

 

 

 

538

 

 

 

4

 

37-48 payments

 

 

—

 

 

 

—

 

 

 

—

 

 

 

135

 

 

 

194

 

 

 

154

 

 

 

483

 

 

 

4

 

More than 48
   payments

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

591

 

 

 

7,011

 

 

 

7,602

 

 

 

59

 

Loans in-school/
   grace/deferment

 

 

39

 

 

 

24

 

 

 

18

 

 

 

9

 

 

 

13

 

 

 

112

 

 

 

215

 

 

 

2

 

Total

 

$

2,263

 

 

$

1,515

 

 

$

631

 

 

$

327

 

 

$

849

 

 

$

7,394

 

 

$

12,979

 

 

 

100

%

Certain Loan
   Modifications(2):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Modified

 

$

—

 

 

$

23

 

 

$

45

 

 

$

43

 

 

$

119

 

 

$

3,221

 

 

$

3,451

 

 

 

27

%

Non-Modified

 

 

2,263

 

 

 

1,492

 

 

 

586

 

 

 

284

 

 

 

730

 

 

 

4,173

 

 

 

9,528

 

 

 

73

 

Total

 

$

2,263

 

 

$

1,515

 

 

$

631

 

 

$

327

 

 

$

849

 

 

$

7,394

 

 

$

12,979

 

 

 

100

%

Cosigners:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

With cosigner(3)

 

$

273

 

 

$

197

 

 

$

80

 

 

$

31

 

 

$

1

 

 

$

2,110

 

 

$

2,692

 

 

 

21

%

Without cosigner

 

 

1,990

 

 

 

1,318

 

 

 

551

 

 

 

296

 

 

 

848

 

 

 

5,284

 

 

 

10,287

 

 

 

79

 

Total

 

$

2,263

 

 

$

1,515

 

 

$

631

 

 

$

327

 

 

$

849

 

 

$

7,394

 

 

$

12,979

 

 

 

100

%

School Type:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Not-for-profit

 

$

2,262

 

 

$

1,515

 

 

$

622

 

 

$

315

 

 

$

831

 

 

$

6,812

 

 

$

12,357

 

 

 

95

%

For-profit

 

 

1

 

 

 

—

 

 

 

9

 

 

 

12

 

 

 

18

 

 

 

582

 

 

 

622

 

 

 

5

 

Total

 

$

2,263

 

 

$

1,515

 

 

$

631

 

 

$

327

 

 

$

849

 

 

$

7,394

 

 

$

12,979

 

 

 

100

%

Allowance for loan
   losses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(299

)

 

 

 

Total loans, net(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

12,680

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Charge-Offs

 

$

—

 

 

$

(5

)

 

$

(6

)

 

$

(7

)

 

$

(9

)

 

$

(175

)

 

$

(202

)

 

 

 

 

(1)
Number of months in active repayment for which a scheduled payment was received.
(2)
Loan Modifications represents 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 for the life of the loan (including loans that meet that definition subsequent to January 1, 2023). This includes loans given rate modifications, term extensions or forbearance greater than 3 months in the prior 24-month period. This classification is not intended to reconcile in any way to the modification disclosures required under ASU No. 2022-02.
(3)
Excluding Refinance Education Loans, the cosigner rate was 65% for total loans at September 30, 2026.
(4)
Excludes $2.4 billion of Private Education Loans that were classified as held for sale as of September 30, 2026 and $235 million of In-School Education Loans carried at fair value, and their corresponding charge-offs.

4. Allowance for Loan Losses – Education Loans (Continued)

 

 

Private Education Loan Credit Quality Indicators by Origination Year

 

 

 

September 30, 2025

 

(Dollars in millions)

 

2025

 

 

2024

 

 

2023

 

 

2022

 

 

2021

 

 

Prior

 

 

Total

 

 

% of Total

 

Credit Quality
   Indicators

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FICO Scores:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

640 and above

 

$

1,566

 

 

$

1,082

 

 

$

592

 

 

$

1,109

 

 

$

2,853

 

 

$

6,688

 

 

$

13,890

 

 

 

88

%

Below 640

 

 

25

 

 

 

50

 

 

 

48

 

 

 

104

 

 

 

166

 

 

 

1,579

 

 

 

1,972

 

 

 

12

 

Total

 

$

1,591

 

 

$

1,132

 

 

$

640

 

 

$

1,213

 

 

$

3,019

 

 

$

8,267

 

 

$

15,862

 

 

 

100

%

Loan Status:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In-school/grace/
   deferment/forbearance

 

$

73

 

 

$

94

 

 

$

53

 

 

$

46

 

 

$

75

 

 

$

300

 

 

$

641

 

 

 

4

%

Current/90 days or
   less delinquent

 

 

1,517

 

 

 

1,032

 

 

 

577

 

 

 

1,150

 

 

 

2,919

 

 

 

7,593

 

 

 

14,788

 

 

 

93

 

Greater than 90 days
   delinquent

 

 

1

 

 

 

6

 

 

 

10

 

 

 

17

 

 

 

25

 

 

 

374

 

 

 

433

 

 

 

3

 

Total

 

$

1,591

 

 

$

1,132

 

 

$

640

 

 

$

1,213

 

 

$

3,019

 

 

$

8,267

 

 

$

15,862

 

 

 

100

%

Seasoning(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1-12 payments

 

$

1,527

 

 

$

595

 

 

$

25

 

 

$

19

 

 

$

9

 

 

$

26

 

 

$

2,201

 

 

 

14

%

13-24 payments

 

 

—

 

 

 

458

 

 

 

330

 

 

 

37

 

 

 

33

 

 

 

36

 

 

 

894

 

 

 

6

 

25-36 payments

 

 

—

 

 

 

—

 

 

 

243

 

 

 

336

 

 

 

80

 

 

 

75

 

 

 

734

 

 

 

5

 

37-48 payments

 

 

—

 

 

 

—

 

 

 

—

 

 

 

791

 

 

 

1,443

 

 

 

131

 

 

 

2,365

 

 

 

15

 

More than 48
   payments

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,418

 

 

 

7,848

 

 

 

9,266

 

 

 

58

 

Loans in-school/
   grace/deferment

 

 

64

 

 

 

79

 

 

 

42

 

 

 

30

 

 

 

36

 

 

 

151

 

 

 

402

 

 

 

2

 

Total

 

$

1,591

 

 

$

1,132

 

 

$

640

 

 

$

1,213

 

 

$

3,019

 

 

$

8,267

 

 

$

15,862

 

 

 

100

%

Certain Loan
   Modifications(2):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Modified

 

$

—

 

 

$

14

 

 

$

32

 

 

$

104

 

 

$

213

 

 

$

4,933

 

 

$

5,296

 

 

 

33

%

Non-Modified

 

 

1,591

 

 

 

1,118

 

 

 

608

 

 

 

1,109

 

 

 

2,806

 

 

 

3,334

 

 

 

10,566

 

 

 

67

 

Total

 

$

1,591

 

 

$

1,132

 

 

$

640

 

 

$

1,213

 

 

$

3,019

 

 

$

8,267

 

 

$

15,862

 

 

 

100

%

Cosigners:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

With cosigner(3)

 

$

318

 

 

$

329

 

 

$

212

 

 

$

129

 

 

$

66

 

 

$

4,017

 

 

$

5,071

 

 

 

32

%

Without cosigner

 

 

1,273

 

 

 

803

 

 

 

428

 

 

 

1,084

 

 

 

2,953

 

 

 

4,250

 

 

 

10,791

 

 

 

68

 

Total

 

$

1,591

 

 

$

1,132

 

 

$

640

 

 

$

1,213

 

 

$

3,019

 

 

$

8,267

 

 

$

15,862

 

 

 

100

%

School Type:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Not-for-profit

 

$

1,500

 

 

$

1,069

 

 

$

604

 

 

$

1,148

 

 

$

2,842

 

 

$

7,185

 

 

$

14,348

 

 

 

90

%

For-profit

 

 

91

 

 

 

63

 

 

 

36

 

 

 

65

 

 

 

177

 

 

 

1,082

 

 

 

1,514

 

 

 

10

 

Total

 

$

1,591

 

 

$

1,132

 

 

$

640

 

 

$

1,213

 

 

$

3,019

 

 

$

8,267

 

 

$

15,862

 

 

 

100

%

Allowance for loan
   losses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(406

)

 

 

 

Total loans, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

15,456

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Charge-Offs

 

$

—

 

 

$

(4

)

 

$

(4

)

 

$

(10

)

 

$

(19

)

 

$

(211

)

 

$

(248

)

 

 

 

 

(1)
Number of months in active repayment for which a scheduled payment was received.
(2)
Loan Modifications represents 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 for the life of the loan (including loans that meet that definition subsequent to January 1, 2023). This includes loans given rate modifications, term extensions or forbearance greater than 3 months in the prior 24-month period. This classification is not intended to reconcile in any way to the modification disclosures required under ASU No. 2022-02.
Excluding Refinance Education Loans, the cosigner rate was 67% for total loans at September 30, 2025.

 

 

 

4. Allowance for Loan Losses – Education Loans (Continued)

 

 

Private Education Loan Delinquencies

 

 

 

September 30, 2026

 

 

December 31, 2025

 

 

September 30, 2025

 

(Dollars in millions)

 

Balance

 

 

%

 

 

Balance

 

 

%

 

 

Balance

 

 

%

 

Loans in-school/grace/deferment(1)

 

$

216

 

 

 

 

 

$

395

 

 

 

 

 

$

402

 

 

 

 

Loans in forbearance(2)

 

 

244

 

 

 

 

 

 

236

 

 

 

 

 

 

239

 

 

 

 

Loans in repayment and percentage of each status:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans current

 

 

11,881

 

 

 

94.9

%

 

 

14,230

 

 

 

93.7

%

 

 

14,291

 

 

 

93.9

%

Loans delinquent 31-60 days(3)

 

 

233

 

 

 

1.9

 

 

 

326

 

 

 

2.1

 

 

 

315

 

 

 

2.1

 

Loans delinquent 61-90 days(3)

 

 

131

 

 

 

1.0

 

 

 

194

 

 

 

1.3

 

 

 

182

 

 

 

1.2

 

Loans delinquent greater than 90 days(3)

 

 

274

 

 

 

2.2

 

 

 

434

 

 

 

2.9

 

 

 

433

 

 

 

2.8

 

Total loans in repayment

 

 

12,519

 

 

 

100

%

 

 

15,184

 

 

 

100

%

 

 

15,221

 

 

 

100

%

Total loans(4)

 

 

12,979

 

 

 

 

 

 

15,815

 

 

 

 

 

 

15,862

 

 

 

 

Allowance for losses

 

 

(299

)

 

 

 

 

 

(364

)

 

 

 

 

 

(406

)

 

 

 

Loans, net

 

$

12,680

 

 

 

 

 

$

15,451

 

 

 

 

 

$

15,456

 

 

 

 

Percentage of loans in repayment

 

 

 

 

 

96.5

%

 

 

 

 

 

96.0

%

 

 

 

 

 

96.0

%

Delinquencies as a percentage of loans in
   repayment

 

 

 

 

 

5.1

%

 

 

 

 

 

6.3

%

 

 

 

 

 

6.1

%

Loans in forbearance as a percentage of
   loans in repayment and forbearance

 

 

 

 

 

1.9

%

 

 

 

 

 

1.5

%

 

 

 

 

 

1.5

%

 

(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)
September 30, 2026 excludes $2.4 billion of Private Education Loans that were classified as held for sale as of September 30, 2026 and $235 million of In-School Education Loans carried at fair value.

 

4. Allowance for Loan Losses – Education Loans (Continued)

FFELP Loans

FFELP Loans are substantially insured and guaranteed as to their principal and accrued interest in the event of default. The key credit quality indicators are loan status and loan type.

 

 

FFELP Loan Delinquencies

 

 

 

September 30, 2026

 

 

December 31, 2025

 

 

September 30, 2025

 

(Dollars in millions)

 

Balance

 

 

%

 

 

Balance

 

 

%

 

 

Balance

 

 

%

 

Loans in-school/grace/deferment(1)

 

$

1,097

 

 

 

 

 

$

1,210

 

 

 

 

 

$

1,276

 

 

 

 

Loans in forbearance(2)

 

 

3,094

 

 

 

 

 

 

3,532

 

 

 

 

 

 

3,726

 

 

 

 

Loans in repayment and percentage of each status:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans current

 

 

18,485

 

 

 

84.6

%

 

 

19,441

 

 

 

82.4

%

 

 

19,766

 

 

 

81.9

%

Loans delinquent 31-60 days(3)

 

 

1,015

 

 

 

4.6

 

 

 

1,075

 

 

 

4.6

 

 

 

1,062

 

 

 

4.4

 

Loans delinquent 61-90 days(3)

 

 

623

 

 

 

2.8

 

 

 

706

 

 

 

3.0

 

 

 

769

 

 

 

3.2

 

Loans delinquent greater than 90 days(3)

 

 

1,749

 

 

 

8.0

 

 

 

2,350

 

 

 

10.0

 

 

 

2,539

 

 

 

10.5

 

Total FFELP Loans in repayment

 

 

21,872

 

 

 

100

%

 

 

23,572

 

 

 

100

%

 

 

24,136

 

 

 

100

%

Total FFELP Loans

 

 

26,063

 

 

 

 

 

 

28,314

 

 

 

 

 

 

29,138

 

 

 

 

FFELP Loan allowance for losses

 

 

(165

)

 

 

 

 

 

(173

)

 

 

 

 

 

(186

)

 

 

 

FFELP Loans, net

 

$

25,898

 

 

 

 

 

$

28,141

 

 

 

 

 

$

28,952

 

 

 

 

Percentage of FFELP Loans in repayment

 

 

 

 

 

83.9

%

 

 

 

 

 

83.3

%

 

 

 

 

 

82.8

%

Delinquencies as a percentage of FFELP Loans in
   repayment

 

 

 

 

 

15.5

%

 

 

 

 

 

17.5

%

 

 

 

 

 

18.1

%

FFELP Loans in forbearance as a percentage of
   loans in repayment and forbearance

 

 

 

 

 

12.4

%

 

 

 

 

 

13.0

%

 

 

 

 

 

13.4

%

 

(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 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.

 

Loan type:

(Dollars in millions)

 

September 30, 2026

 

 

September 30, 2025

 

 

Change

 

Stafford Loans

 

$

8,615

 

 

$

9,528

 

 

$

(913

)

Consolidation Loans

 

 

14,796

 

 

 

16,649

 

 

 

(1,853

)

Rehab Loans

 

 

2,652

 

 

 

2,961

 

 

 

(309

)

Total loans, gross

 

$

26,063

 

 

$

29,138

 

 

$

(3,075

)

Loan Modifications to Borrowers Experiencing Financial Difficulty

We adjust the terms of Private Education Loans for certain borrowers when we believe such changes will help our customers better manage their student loan obligations, achieve better outcomes and increase the collectability of the loans. These changes generally take the form of a temporary interest rate reduction, a temporary forbearance of payments, a temporary interest-only payment, and a temporary interest rate reduction with a permanent extension of the loan term. The effect of modifications of loans made to borrowers who are experiencing financial difficulty is already included in the allowance for credit losses because of the measurement methodologies used to estimate the allowance. The model design predicts borrowers that will have financial difficulty in the future and require loan modification and increased life of loan default risk.

Under our current forbearance practices, temporary hardship forbearance of payments generally cannot exceed 12 months over the life of the loan. However, exceptions can be made in cases where borrowers have shown the ability to make a substantial number of monthly principal and interest payments and in those cases borrowers can be granted up to 24 months of hardship forbearance over the life of the loan. We offer other administrative forbearances (e.g., death and disability, bankruptcy, military service, and disaster forbearance) that are either required by law (such as the Servicemembers Civil Relief Act) or are considered separate from our active loss mitigation programs and therefore are not considered to be loan modifications requiring disclosure under ASU No. 2022-02.

4. Allowance for Loan Losses – Education Loans (Continued)

FFELP Loans are at least 97 percent guaranteed as to their principal and accrued interest by the federal government in the event of default and, therefore, we do not deem FFELP Loans as nonperforming from a credit risk perspective at any point in their life cycle prior to claim payment and continue to accrue interest on those loans through the date of claim. Further, FFELP loan modification events are either legal entitlements subject to regulatory-driven eligibility criteria or addressed in the promissory note terms, so we do not consider these events as a component of our loan modification programs.

The disclosures below through the end of this footnote, for the three and nine months ended September 30, 2026, exclude the $2.4 billion of loans which were classified as held for sale as of September 30, 2026.

The following tables show the amortized cost basis as of September 30, 2026 and 2025 of the loans to borrowers experiencing financial difficulty that were modified during the respective period.

 

 

 

Three Months Ended September 30, 2026

 

 

 

Loan Modifications Made to Borrowers Experiencing Financial Difficulty

 

(Dollars in millions)

 

Interest Rate Reductions(1)

 

 

More Than an Insignificant Payment Delay (2)

 

 

Combination Rate Reduction and Term Extension

 

Loan Type

 

Amortized Cost

 

 

% of Loan Type

 

 

Amortized Cost

 

 

% of Loan Type

 

 

Amortized Cost

 

 

% of Loan Type

 

Private Education
   Loans

 

$

388

 

 

 

3.0

%

 

$

198

 

 

 

1.5

%

 

$

18

 

 

 

.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2025

 

 

 

Loan Modifications Made to Borrowers Experiencing Financial Difficulty

 

(Dollars in millions)

 

Interest Rate Reductions(1)

 

 

More Than an Insignificant Payment Delay (2)

 

 

Combination Rate Reduction and Term Extension

 

Loan Type

 

Amortized Cost

 

 

% of Loan Type

 

 

Amortized Cost

 

 

% of Loan Type

 

 

Amortized Cost

 

 

% of Loan Type

 

Private Education
   Loans

 

$

599

 

 

 

3.8

%

 

$

298

 

 

 

1.9

%

 

$

33

 

 

 

.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2026

 

(Dollars in millions)

 

Interest Rate Reductions(1)

 

 

More Than an Insignificant Payment Delay (2)

 

 

Combination Rate Reduction and Term Extension

 

Loan Type

 

Amortized Cost

 

 

% of Loan Type

 

 

Amortized Cost

 

 

% of Loan Type

 

 

Amortized Cost

 

 

% of Loan Type

 

Private Education
   Loans

 

$

1,082

 

 

 

8.3

%

 

$

489

 

 

 

3.8

%

 

$

62

 

 

 

.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2025

 

(Dollars in millions)

 

Interest Rate Reductions(1)

 

 

More Than an Insignificant Payment Delay (2)

 

 

Combination Rate Reduction and Term Extension

 

Loan Type

 

Amortized Cost

 

 

% of Loan Type

 

 

Amortized Cost

 

 

% of Loan Type

 

 

Amortized Cost

 

 

% of Loan Type

 

Private Education
   Loans

 

$

1,554

 

 

 

9.8

%

 

$

734

 

 

 

4.6

%

 

$

87

 

 

 

.5

%

 

(1)
As of September 30, 2026 and 2025, there was $0.9 billion and $1.0 billion, respectively, of loans in the interest rate reduction program.
(2)
More Than an Insignificant Payment Delay includes loans granted more than 3 months of short-term interest only payments or hardship forbearance.

 

4. Allowance for Loan Losses – Education Loans (Continued)

For those loans modified in the three and nine months ended September 30, 2026 and 2025, the following tables show the impact of such modification.

 

Three Months Ended September 30, 2026

Loan Type

Interest Rate Reductions

More Than an Insignificant Payment Delay

Combination Rate Reduction and Term Extension

Private Education Loans

Reduced the weighted average contractual rate from 11.9% to 5.1%

Added an average 5 months to the remaining life of the loans

Added an average 6 years to the remaining life of the loans and reduced the weighted average contractual rate from
10.7% to 4.7%.

 

 

 

 

Three Months Ended September 30, 2025

Loan Type

Interest Rate Reductions

More Than an Insignificant Payment Delay

Combination Rate Reduction and Term Extension

Private Education Loans

Reduced the weighted average contractual rate from 12.3% to 5.4%

Added an average 5 months to the remaining life of the loans

Added an average 6 years to the remaining life of the loans and reduced the weighted average contractual rate from
12% to 5.2%.

 

 

 

 

Nine Months Ended September 30, 2026

Loan Type

Interest Rate Reductions

More Than an Insignificant Payment Delay

Combination Rate Reduction and Term Extension

Private Education Loans

Reduced the weighted average contractual rate from 11.9% to 5.2%

Added an average 6 months to the remaining life of the loans

Added an average 6 years to the remaining life of the loans and reduced the weighted average contractual rate from
11.2% to 4.7%.

 

 

 

 

Nine Months Ended September 30, 2025

Loan Type

Interest Rate Reductions

More Than an Insignificant Payment Delay

Combination Rate Reduction and Term Extension

Private Education Loans

Reduced the weighted average contractual rate from 12.3% to 5.4%

Added an average 7 months to the remaining life of the loans

Added an average 7 years to the remaining life of the loans and reduced the weighted average contractual rate from
12.1% to 5.4%.

The following table provides the amount of loan modifications for which a charge-off or payment default occurred in the respective period and within 12 months of the loan receiving a loan modification. We define payment default as 60 days or more past due for purposes of this disclosure. We closely monitor performance of the loans to borrowers experiencing financial difficulty that are modified to understand the effectiveness of the modification efforts.

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(Dollars in millions)

 

2026

 

 

2025

 

 

2026

 

 

2025

 

Modified loans (amortized cost) (1)

 

$

187

 

 

$

142

 

 

$

241

 

 

$

345

 

Payment default (par)

 

$

189

 

 

$

145

 

 

$

244

 

 

$

353

 

Charge-offs (par)

 

$

16

 

 

$

19

 

 

$

53

 

 

$

44

 

 

(1)
For the three months ended September 30, 2026 and 2025, the modified loans include $145 million and $95 million, respectively, of Interest Rate Reduction, $7 million and $7 million, respectively, of Combination Rate Reduction and Term Extension, and $35 million and $40 million, respectively, of More Than Insignificant Payment Delay. For the nine months ended September 30, 2026 and 2025, the modified loans include $177 million and $242 million, respectively, of Interest Rate Reduction, $10 million and $15 million, respectively, of Combination Rate Reduction and Term Extension, and $54 million and $88 million, respectively, of More Than Insignificant Payment Delay.

4. Allowance for Loan Losses – Education Loans (Continued)

The following table provides the performance and related loan status of Private Education Loans that have been modified within the 12 months prior to September 30, 2026 and the 12 months prior to December 31, 2025, respectively.

 

 

 

Payment Status (Amortized Cost)

 

(Dollars in millions)

 

Twelve Months Ended

 

Loan Status

 

September 30, 2026

 

 

December 31, 2025

 

Loans in school/deferment

 

$

18

 

 

$

24

 

Loans in forbearance

 

 

81

 

 

 

73

 

Loans current

 

 

1,390

 

 

 

2,056

 

Loans delinquent 31 - 60 days

 

 

144

 

 

 

191

 

Loans delinquent 61 - 90 days

 

 

89

 

 

 

125

 

Loans delinquent greater than 90 days

 

 

143

 

 

 

211

 

  Total modified loans

 

$

1,865

 

 

$

2,680

 

 

 

 

 

 

 

 

 

5. Goodwill

The following table summarizes our goodwill for our reporting units and reportable segments.

 

 

 

 

 

(Dollars in millions)

 

September 30, 2026

 

 

December 31, 2025

 

Consumer Lending reportable segment:

 

 

 

 

 

 

Legacy In-School Education Loans

 

$

106

 

 

$

106

 

Refinance Education Loans

 

 

77

 

 

 

77

 

Recent In-School Education Loans

 

 

13

 

 

 

13

 

   Total

 

 

196

 

 

 

196

 

Federal Education Loans reportable segment:

 

 

 

 

 

 

FFELP Loans

 

 

227

 

 

 

227

 

Federal Education Loan Servicing

 

 

5

 

 

 

5

 

   Total

 

 

232

 

 

 

232

 

Total goodwill

 

$

428

 

 

$

428

 

 

The Company performs its annual goodwill impairment test as of October 1. As of October 1, 2025, a quantitative test was performed, and the fair value of each reporting unit with goodwill exceeded its carrying value. In January 2026, Navient’s stock price experienced a decline and sustained volatility after Navient reduced its 2026 EPS guidance. The Company determined the decline in stock price constituted a triggering event requiring an interim goodwill impairment assessment.

Accordingly, management performed a qualitative impairment assessment as of March 31, 2026. The assessment included an analysis of the amount of cushion that existed (difference between the fair value and carrying value of the reporting unit) when the quantitative test was last completed in the fourth quarter of 2025, and a review of macroeconomic conditions, including stock price volatilities within our industry and the broader market, the regulatory and legislative environment and the performance of each reporting unit relative to the key assumptions used in the previous October 1, 2025, quantitative test. We also considered our market capitalization in relation to book equity. We concluded it was more likely than not on March 31, 2026, that the fair value of each reporting unit with goodwill continued to exceed their respective carrying values and therefore goodwill was not impaired. Therefore, a quantitative impairment test was not required.

We did not identify an additional triggering event for the second quarter ended June 30, 2026. Likewise, we did not identify a triggering event for the third quarter ended September 30, 2026 for the Private Education Refinance Loans, Private Education In-School Loans, Federal Education Loans and Federal Education Loan Servicing reporting units. We did, however, identify a triggering event related to the Private Education Legacy In-School Loans (Legacy Loans). As a result of recent and forecasted delinquencies and charge-offs persisting at elevated levels for a longer duration than previously anticipated, which resulted in the recognition of a Legacy loan provision for loan losses in the third quarter, we performed a quantitative impairment test. We used an income approach to estimate the fair value of the reporting unit measuring the value of future economic benefit determined based on the reporting unit’s discounted cash flows derived from our portfolio cash flow projections. Among other actors, the selected discount rate incorporated a company specific risk premium to capture specific risk related directly or indirectly to the reporting unit.

Goodwill attributed to the Legacy Loans reporting unit was not deemed impaired as a result of the quantitative impairment test as the concluded fair value of the reporting unit was greater than the reporting unit’s carrying value. We will continue to monitor actual cash flows in comparison to our estimated future cash flows for the Legacy Loans reporting unit.

We will continue to monitor the Company’s market capitalization and other qualitative factors to assess whether the underlying fair value of the Company’s reporting units has declined, which could result in future goodwill impairment. We will also monitor the decline in the stock price as a sustained decline could lead to goodwill impairment in the future.

 

 

 

 

6. Borrowings

The following table summarizes our borrowings.

 

 

September 30, 2026

 

 

December 31, 2025

 

(Dollars in millions)

 

Short
Term

 

 

Long
Term

 

 

Total

 

 

Short
Term

 

 

Long
Term

 

 

Total

 

Unsecured borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Senior unsecured debt

 

$

721

 

 

$

4,581

 

 

$

5,302

 

 

$

525

 

 

$

4,782

 

 

$

5,307

 

Total unsecured borrowings

 

 

721

 

 

 

4,581

 

 

 

5,302

 

 

 

525

 

 

 

4,782

 

 

 

5,307

 

Secured borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Private Education Loan securitizations(1)

 

 

384

 

 

 

9,953

 

 

 

10,337

 

 

 

469

 

 

 

10,250

 

 

 

10,719

 

FFELP Loan securitizations(2)(3)

 

 

—

 

 

 

22,637

 

 

 

22,637

 

 

 

109

 

 

 

25,302

 

 

 

25,411

 

Private Education Loan ABCP facilities(4)

 

 

2,109

 

 

 

—

 

 

 

2,109

 

 

 

1,942

 

 

 

—

 

 

 

1,942

 

FFELP Loan ABCP facilities(4)

 

 

2,349

 

 

 

376

 

 

 

2,725

 

 

 

1,869

 

 

 

299

 

 

 

2,168

 

Other(5)

 

 

196

 

 

 

79

 

 

 

275

 

 

 

160

 

 

 

39

 

 

 

199

 

Total secured borrowings

 

 

5,038

 

 

 

33,045

 

 

 

38,083

 

 

 

4,549

 

 

 

35,890

 

 

 

40,439

 

Total before hedge accounting adjustments

 

 

5,759

 

 

 

37,626

 

 

 

43,385

 

 

 

5,074

 

 

 

40,672

 

 

 

45,746

 

Hedge accounting adjustments

 

 

(8

)

 

 

(197

)

 

 

(205

)

 

 

(1

)

 

 

(39

)

 

 

(40

)

Total

 

$

5,751

 

 

$

37,429

 

 

$

43,180

 

 

$

5,073

 

 

$

40,633

 

 

$

45,706

 

 

(1)
Includes $384 million and $469 million of short-term debt related to the Private Education Loan ABS repurchase facilities (Private Education Loan Repurchase Facilities) as of September 30, 2026 and December 31, 2025, respectively.
(2)
Includes $0 million and $109 million of short-term debt and $115 million and $0 million of long-term debt related to the FFELP Loan ABS repurchase facilities (FFELP Loan Repurchase Facilities) as of September 30, 2026 and December 31, 2025, respectively.
(3)
Includes defaulted FFELP secured debt tranches with a remaining principal amount of $948 million as of September 30, 2026 as a result of not maturing by their respective contractual maturity dates. Notices were delivered to the trustee, rating agencies and bondholders alerting them to these maturity date defaults. At this time, it is expected the bonds will be paid in full between 2027 and 2040. There is no impact to the principal amount owed or the coupon at which the bonds accrue, and there is no revised contractual maturity date.
(4)
ABCP facilities include $1.7 billion and $870 million of gross issuances in the three months ended September 30, 2026 and 2025, respectively, and $853 million and $675 million of gross paydowns in the three months ended September 30, 2026 and 2025, respectively. ABCP facilities include $3.3 billion and $1.8 billion of gross issuances in the nine months ended September 30, 2026 and 2025, respectively, and $2.5 billion and $1.8 billion of gross paydowns in the nine months ended September 30, 2026 and 2025, respectively.
(5)
“Other” primarily includes short-term repurchase obligation funding.

 

 

6. Borrowings (Continued)

Variable Interest Entities

We consolidated the following financing VIEs as of September 30, 2026 and December 31, 2025, as we are the primary beneficiary. As a result, these VIEs are accounted for as secured borrowings.

 

 

 

September 30, 2026

 

 

 

Debt Outstanding

 

 

Carrying Amount of Assets Securing
Debt Outstanding

 

(Dollars in millions)

 

Short
Term

 

 

Long
Term

 

 

Total

 

 

Loans

 

 

Cash

 

 

Other
Assets

 

 

Total

 

Secured Borrowings — VIEs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Private Education Loan securitizations

 

$

384

 

 

$

9,953

 

 

$

10,337

 

 

$

11,735

 

 

$

352

 

 

$

152

 

 

$

12,239

 

FFELP Loan securitizations

 

 

—

 

 

 

22,637

 

 

 

22,637

 

 

 

23,198

 

 

 

762

 

 

 

1,092

 

 

 

25,052

 

Private Education Loan ABCP facilities

 

 

2,109

 

 

 

—

 

 

 

2,109

 

 

 

2,557

 

 

 

93

 

 

 

31

 

 

 

2,681

 

FFELP Loan ABCP facilities

 

 

2,349

 

 

 

376

 

 

 

2,725

 

 

 

2,657

 

 

 

77

 

 

 

142

 

 

 

2,876

 

Personal Loan ABCP facilities

 

 

—

 

 

 

40

 

 

 

40

 

 

 

47

 

 

 

—

 

 

 

—

 

 

 

47

 

Total before hedge accounting
   adjustments

 

 

4,842

 

 

 

33,006

 

 

 

37,848

 

 

 

40,194

 

 

 

1,284

 

 

 

1,417

 

 

 

42,895

 

Hedge accounting adjustments

 

 

—

 

 

 

(46

)

 

 

(46

)

 

 

—

 

 

 

—

 

 

 

(95

)

 

 

(95

)

Total

 

$

4,842

 

 

$

32,960

 

 

$

37,802

 

 

$

40,194

 

 

$

1,284

 

 

$

1,322

 

 

$

42,800

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2025

 

 

 

Debt Outstanding

 

 

Carrying Amount of Assets Securing
Debt Outstanding

 

(Dollars in millions)

 

Short
Term

 

 

Long
Term

 

 

Total

 

 

Loans

 

 

Cash

 

 

Other
Assets

 

 

Total

 

Secured Borrowings — VIEs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Private Education Loan securitizations

 

$

469

 

 

$

10,250

 

 

$

10,719

 

 

$

11,960

 

 

$

364

 

 

$

127

 

 

$

12,451

 

FFELP Loan securitizations

 

 

109

 

 

 

25,302

 

 

 

25,411

 

 

 

25,942

 

 

 

950

 

 

 

1,096

 

 

 

27,988

 

Private Education Loan ABCP facilities

 

 

1,942

 

 

 

—

 

 

 

1,942

 

 

 

2,173

 

 

 

68

 

 

 

44

 

 

 

2,285

 

FFELP Loan ABCP facilities

 

 

1,869

 

 

 

299

 

 

 

2,168

 

 

 

2,115

 

 

 

84

 

 

 

108

 

 

 

2,307

 

Total before hedge accounting
   adjustments

 

 

4,389

 

 

 

35,851

 

 

 

40,240

 

 

 

42,190

 

 

 

1,466

 

 

 

1,375

 

 

 

45,031

 

Hedge accounting adjustments

 

 

—

 

 

 

(16

)

 

 

(16

)

 

 

—

 

 

 

—

 

 

 

(75

)

 

 

(75

)

Total

 

$

4,389

 

 

$

35,835

 

 

$

40,224

 

 

$

42,190

 

 

$

1,466

 

 

$

1,300

 

 

$

44,956

 

 

7. Derivative Financial Instruments

Summary of Derivative Financial Statement Impact

The following tables summarize the fair values and notional amounts of all derivative instruments and their impact on net income and other comprehensive income.

Impact of Derivatives on Balance Sheet

 

 

 

 

Cash Flow

 

 

Fair Value(3)

 

 

Trading

 

 

Total

 

(Dollars in millions)

 

Hedged Risk
Exposure

 

Sep 30, 2026

 

 

Dec 31, 2025

 

 

Sep 30, 2026

 

 

Dec 31, 2025

 

 

Sep 30, 2026

 

 

Dec 31, 2025

 

 

Sep 30, 2026

 

 

Dec 31, 2025

 

Fair Values(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swaps

 

Interest rate

 

$

—

 

 

$

—

 

 

$

—

 

 

$

39

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

39

 

Cross-currency interest rate
   swaps

 

Foreign currency and interest rate

 

 

—

 

 

 

—

 

 

 

—

 

 

 

3

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

3

 

Total derivative assets(2)

 

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

42

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

42

 

Derivative Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swaps

 

Interest rate

 

 

—

 

 

 

—

 

 

 

(6

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(6

)

 

 

—

 

Cross-currency interest rate
   swaps

 

Foreign currency and interest rate

 

 

—

 

 

 

—

 

 

 

(95

)

 

 

(79

)

 

 

—

 

 

 

—

 

 

 

(95

)

 

 

(79

)

Total derivative liabilities(2)

 

 

 

 

—

 

 

 

—

 

 

 

(101

)

 

 

(79

)

 

 

—

 

 

 

—

 

 

 

(101

)

 

 

(79

)

Net total derivatives

 

 

 

$

—

 

 

$

—

 

 

$

(101

)

 

$

(37

)

 

$

—

 

 

$

—

 

 

$

(101

)

 

$

(37

)

(1)
Fair values reported are exclusive of collateral held and pledged and accrued interest. Assets and liabilities are presented without consideration of master netting agreements. Derivatives are carried on the balance sheet based on net position by counterparty under master netting agreements and classified in other assets or other liabilities depending on whether in a net positive or negative position.
(2)
The following table shows derivative positions net of collateral:

 

 

Other Assets

 

 

Other Liabilities

 

(Dollars in millions)

 

September 30, 2026

 

 

December 31, 2025

 

 

September 30, 2026

 

 

December 31, 2025

 

Derivative values (as carried on balance sheet)

 

$

—

 

 

$

42

 

 

$

(101

)

 

$

(79

)

Cash collateral (held) pledged

 

 

—

 

 

 

(44

)

 

 

37

 

 

 

40

 

Net position

 

$

—

 

 

$

(2

)

 

$

(64

)

 

$

(39

)

 

(3)
The following table shows the carrying value of liabilities in fair value hedges and the related fair value hedging adjustments to these liabilities:

 

 

 

As of September 30, 2026

 

 

As of December 31, 2025

 

(Dollars in millions)

 

Carrying
 Value

 

 

Hedge Basis Adjustments

 

 

Carrying
 Value

 

 

Hedge Basis Adjustments

 

Short-term borrowings

 

$

691

 

 

$

(8

)

 

$

499

 

 

$

(1

)

Long-term borrowings

 

$

4,175

 

 

$

(199

)

 

$

4,675

 

 

$

(42

)

7. Derivative Financial Instruments (Continued)

The above fair values include adjustments when necessary for counterparty credit risk.

 

 

Cash Flow

 

 

Fair Value

 

 

Trading

 

 

Total

 

(Dollars in billions)

 

Sep 30, 2026

 

 

Dec 31, 2025

 

 

Sep 30, 2026

 

 

Dec 31, 2025

 

 

Sep 30, 2026

 

 

Dec 31, 2025

 

 

Sep 30, 2026

 

 

Dec 31, 2025

 

Notional Values:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swaps

 

$

2.4

 

 

$

1.3

 

 

$

4.1

 

 

$

4.1

 

 

$

.1

 

 

$

.7

 

 

$

6.6

 

 

$

6.1

 

Cross-currency interest rate
  swaps

 

 

—

 

 

 

—

 

 

 

1.0

 

 

 

1.2

 

 

 

—

 

 

 

—

 

 

 

1.0

 

 

 

1.2

 

Total derivatives

 

$

2.4

 

 

$

1.3

 

 

$

5.1

 

 

$

5.3

 

 

$

.1

 

 

$

.7

 

 

$

7.6

 

 

$

7.3

 

 

Mark-to-Market Impact of Derivatives on Statements of Income

 

 

Total Gains (Losses)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(Dollars in millions)

 

2026

 

 

2025

 

 

2026

 

 

2025

 

Fair Value Hedges:

 

 

 

 

 

 

 

 

 

 

 

 

Interest Rate Swaps

 

 

 

 

 

 

 

 

 

 

 

 

Gains (losses) recognized in net income on derivatives

 

$

(96

)

 

$

19

 

 

$

(124

)

 

$

128

 

Gains (losses) recognized in net income on hedged
   items

 

 

103

 

 

 

(21

)

 

 

134

 

 

 

(137

)

Net fair value hedge ineffectiveness gains (losses)

 

 

7

 

 

 

(2

)

 

 

10

 

 

 

(9

)

Cross-currency interest rate swaps

 

 

 

 

 

 

 

 

 

 

 

 

Gains (losses) recognized in net income on derivatives

 

 

(4

)

 

 

(1

)

 

 

(19

)

 

 

168

 

Gains (losses) recognized in net income on hedged
   items

 

 

6

 

 

 

5

 

 

 

30

 

 

 

(159

)

Net fair value hedge ineffectiveness gains (losses)

 

 

2

 

 

 

4

 

 

 

11

 

 

 

9

 

Total fair value hedges(1)(2)

 

 

9

 

 

 

2

 

 

 

21

 

 

 

—

 

Cash Flow Hedges:

 

 

 

 

 

 

 

 

 

 

 

 

Total cash flow hedges(2)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Trading:

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swaps

 

 

5

 

 

 

(4

)

 

 

11

 

 

 

(34

)

Total trading derivatives(3)

 

 

5

 

 

 

(4

)

 

 

11

 

 

 

(34

)

Mark-to-market gains (losses) recognized

 

$

14

 

 

$

(2

)

 

$

32

 

 

$

(34

)

(1)
Recorded in interest expense in the consolidated statements of income.
(2)
The accrued interest income (expense) on fair value hedges and cash flow hedges is recorded in interest expense and is excluded from this table.
(3)
Recorded in “gains (losses) on derivative and hedging activities, net” in the consolidated statements of income.

 

7. Derivative Financial Instruments (Continued)

Impact of Derivatives on Other Comprehensive Income (Equity)

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(Dollars in millions)

 

2026

 

 

2025

 

 

2026

 

 

2025

 

Total gains (losses) on cash flow hedges

 

$

46

 

 

$

—

 

 

$

58

 

 

$

(3

)

Reclassification adjustments for derivative (gains) losses
  included in net income (interest expense)(1)

 

 

—

 

 

 

(1

)

 

 

—

 

 

 

(1

)

Net changes in cash flow hedges, net of tax

 

$

46

 

 

$

(1

)

 

$

58

 

 

$

(4

)

(1)
Includes net settlement income/expense.

 

Collateral

The following table details collateral held and pledged related to derivative exposure between us and our derivative counterparties:

(Dollars in millions)

 

September 30, 2026

 

 

December 31, 2025

 

Collateral held:

 

 

 

 

 

 

Cash (obligation to return cash collateral is recorded in short-term borrowings)

 

$

—

 

 

$

44

 

Securities at fair value — corporate derivatives (not recorded in financial
   statements)(1)

 

 

—

 

 

 

—

 

Securities at fair value — on-balance sheet securitization derivatives (not
   recorded in financial statements)(2)

 

 

—

 

 

 

—

 

Total collateral held

 

$

—

 

 

$

44

 

Derivative asset at fair value including accrued interest

 

$

—

 

 

$

51

 

Collateral pledged to others:

 

 

 

 

 

 

Cash (right to receive return of cash collateral is recorded in investments)

 

$

37

 

 

$

40

 

Total collateral pledged

 

$

37

 

 

$

40

 

Derivative liability at fair value including accrued interest and premium
   receivable

 

$

105

 

 

$

84

 

(1)
The Company has the ability to sell or re-pledge securities it holds as collateral.
(2)
The trusts do not have the ability to sell or re-pledge securities they hold as collateral.

 

Our corporate derivatives contain credit contingent features. At our current unsecured credit rating, we have fully collateralized our corporate liability position (including accrued interest and net of premiums receivable) of $6 million with our counterparties. Downgrades in our unsecured credit rating would not result in any additional collateral requirements. Trust related derivatives do not contain credit contingent features related to our or the trusts' credit ratings. At September 30, 2026 and December 31, 2025, we have a net positive exposure (derivative gain positions to us less collateral which has been posted by counterparties to us) related to Navient Holdings, Inc. derivatives of $0 and $4 million, respectively. The trusts are not required to post collateral to the counterparties. At September 30, 2026 and December 31, 2025, the net positive exposure on swaps in securitization trusts was $0 and $3 million, respectively.

 

8. Other Assets

The following table provides the detail of our other assets.

(Dollars in millions)

 

September 30, 2026

 

 

December 31, 2025

 

Accrued interest receivable

 

$

1,671

 

 

$

1,658

 

Benefit and insurance-related investments

 

 

456

 

 

 

458

 

Income tax asset, net

 

 

129

 

 

 

150

 

Derivatives at fair value

 

 

—

 

 

 

42

 

Fixed assets

 

 

25

 

 

 

23

 

Accounts receivable

 

 

23

 

 

 

12

 

Other

 

 

109

 

 

 

42

 

Total

 

$

2,413

 

 

$

2,385

 

9. Stockholders’ Equity

The following table summarizes our common share repurchases, issuances and dividends paid.

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(Dollars and shares in millions, except per share amounts)

 

2026

 

 

2025

 

 

2026

 

 

2025

 

Common stock repurchased(1)

 

 

1.1

 

 

 

2.0

 

 

 

3.7

 

 

 

6.4

 

Common stock repurchased (in dollars)(1)

 

$

10

 

 

$

26

 

 

$

36

 

 

$

85

 

Average purchase price per share(1)

 

$

9.02

 

 

$

13.19

 

 

$

9.48

 

 

$

13.21

 

Remaining common stock repurchase authority(1)

 

$

64

 

 

$

26

 

 

$

64

 

 

$

26

 

Shares repurchased related to employee stock-based
  compensation plans(2)

 

 

—

 

 

 

—

 

 

 

.4

 

 

 

.4

 

Average purchase price per share(2)

 

$

—

 

 

$

—

 

 

$

9.65

 

 

$

13.80

 

Common shares issued(3)

 

 

—

 

 

 

.1

 

 

 

1.4

 

 

 

1.4

 

Dividends paid

 

$

15

 

 

$

16

 

 

$

45

 

 

$

48

 

Dividends per share

 

$

.16

 

 

$

.16

 

 

$

.48

 

 

$

.48

 

(1)
Common shares purchased under our share repurchase program. Our Board of Directors authorized a $100 million share repurchase program in October 2025.
(2)
Comprises shares withheld from the vesting of restricted stock for employees’ tax withholding obligations.
(3)
Common shares issued under our various compensation and benefit plans.

The closing price of our common stock on September 30, 2026 was $9.07.

10. Earnings (Loss) per Common Share

Basic earnings (loss) per common share (EPS) are calculated using the weighted average number of shares of common stock outstanding during each period. A reconciliation of the numerators and denominators of the basic and diluted EPS calculations on a GAAP basis follows.

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(In millions, except per share data)

 

2026

 

 

2025

 

 

2026

 

 

2025

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

15

 

 

$

(86

)

 

$

56

 

 

$

(75

)

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares used to compute basic EPS

 

 

93

 

 

 

98

 

 

 

94

 

 

 

100

 

Effect of dilutive securities:

 

 

 

 

 

 

 

 

 

 

 

 

Dilutive effect of restricted stock, restricted
   stock units, performance stock units, and
   Employee Stock Purchase Plan (ESPP)(1)

 

 

1

 

 

 

—

 

 

 

1

 

 

 

—

 

Dilutive potential common shares(2)

 

 

1

 

 

 

—

 

 

 

1

 

 

 

—

 

Weighted average shares used to compute
   diluted EPS

 

 

94

 

 

 

98

 

 

 

95

 

 

 

100

 

Basic earnings per common share

 

$

.16

 

 

$

(.87

)

 

$

.60

 

 

$

(.75

)

Diluted earnings per common share

 

$

.16

 

 

$

(.87

)

 

$

.59

 

 

$

(.75

)

 

(1)
Includes the potential dilutive effect of additional common shares that are issuable upon the vesting of restricted stock, restricted stock units and performance stock units and the outstanding commitment to issue shares under the ESPP, determined by the treasury stock method.
(2)
For the three months ended September 30, 2026 and 2025, approximately 0 million and 2 million shares, respectively, were outstanding but not included in the computation of diluted earnings per share because they were anti-dilutive. For the nine months ended September 30, 2026 and 2025, securities covering approximately 0 million and 2 million shares, respectively, were outstanding but not included in the computation of diluted earnings per share because they were anti-dilutive.

 

 

11. Fair Value Measurements

 

As discussed in "Note 2 – Significant Accounting Policies,” effective July 1, 2026, the Company elected the fair value option available under ASC Topic 825, "Financial Instruments," to account for In School Private Education Loans originated on or after that date. Accordingly, these loans and commitments have been recorded at fair value and will continue to be re-measured each reporting period to the then current fair value of the loans. With the assistance of a third party valuation specialist fair value was determined by modeling loan cash flows using stated terms of the loans using mostly internally developed assumptions that are validated against market transactions when available. The primary assumptions used to determine fair value of this portfolio are prepayment speeds, loss rates, and the discount rate . A number of significant inputs into the models are internally derived and not observable in active markets. While the resulting fair value can be validated against market transactions where we are a participant, these markets are not considered active. As such, these are level 3 valuations.

We use estimates of fair value in applying various accounting standards in our financial statements. We categorize our fair value estimates based on a hierarchical framework associated with three levels of price transparency utilized in measuring financial instruments at fair value. The fair value of the items discussed below are separately disclosed in this footnote.

During the three and nine months ended September 30, 2026 and 2025, there were no significant transfers of financial instruments between levels, or changes in our methodology used to value our financial instruments.

The following table summarizes the valuation of our financial instruments that are marked-to-market on a recurring basis.

 

 

 

Fair Value Measurements on a Recurring Basis

 

 

 

September 30, 2026

 

 

December 31, 2025

 

(Dollars in millions)

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Private Education Loans at fair value

 

$

—

 

 

$

—

 

 

$

235

 

 

$

235

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

  Private Education Loan
    commitments(1)

 

 

—

 

 

 

—

 

 

 

12

 

 

 

12

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

  Interest rate swaps(2)(3)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

39

 

 

 

—

 

 

 

39

 

  Cross-currency interest rate
    swaps(2)(3)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

3

 

 

 

3

 

Total assets

 

$

—

 

 

$

—

 

 

$

247

 

 

$

247

 

 

$

—

 

 

$

39

 

 

$

3

 

 

$

42

 

Liabilities(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Interest rate swaps(2)(3)

 

$

—

 

 

$

(6

)

 

$

—

 

 

$

(6

)

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

  Cross-currency interest rate
    swaps(2)(3)

 

 

—

 

 

 

—

 

 

 

(95

)

 

 

(95

)

 

 

—

 

 

 

—

 

 

 

(79

)

 

 

(79

)

Total liabilities

 

$

—

 

 

$

(6

)

 

$

(95

)

 

$

(101

)

 

$

—

 

 

$

—

 

 

$

(79

)

 

$

(79

)

 

(1)
Private Education Loan commitments are loans that have been originated but have not yet disbursed. These are carried in Other Assets on the balance sheet.
(2)
Fair value of derivative instruments excludes accrued interest and the value of collateral.
(3)
See "Note 7 – Derivative Financial Instruments" for a reconciliation of gross positions without the impact of master netting agreements to the balance sheet classification.
(4)
Borrowings which are the hedged item in a fair value hedge relationship and which are adjusted for changes in value due to benchmark interest rates only are not carried at full fair value and not reflected in this table.

 

 

 

11. Fair Value Measurements (Continued)

The following tables summarize the change in balance sheet carrying value associated with level 3 financial instruments carried at fair value on a recurring basis.

 

 

Three Months Ended September 30,

 

 

 

2026

 

 

2025

 

(Dollars in millions)

 

Interest
Rate Swaps

 

 

Cross
Currency
Interest
Rate Swaps

 

 

Private Education Loans

 

 

Private Education Loan Commitments

 

 

Interest
Rate Swaps

 

 

Cross
Currency
Interest
Rate Swaps

 

Balance, beginning of
   period

 

$

—

 

 

$

(91

)

 

$

—

 

 

$

—

 

 

$

—

 

 

$

(75

)

Total gains/(losses):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Included in earnings(1)

 

 

—

 

 

 

(9

)

 

 

11

 

 

 

12

 

 

 

—

 

 

 

(10

)

Purchases(2)

 

 

—

 

 

 

—

 

 

 

226

 

 

 

—

 

 

 

—

 

 

 

—

 

Settlements(3)

 

 

—

 

 

 

5

 

 

 

(2

)

 

 

—

 

 

 

—

 

 

 

9

 

Other changes(4)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Transfers in and/or out
  of level 3

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Balance, end of period

 

$

—

 

 

$

(95

)

 

$

235

 

 

$

12

 

 

$

—

 

 

$

(76

)

Change in mark-to-
   market gains/
   (losses) relating
   to instruments
   still held at the
   reporting date(5)

 

$

—

 

 

$

(4

)

 

$

11

 

 

$

12

 

 

$

—

 

 

$

(1

)

 

 

 

 

 

Nine Months Ended September 30,

 

 

 

2026

 

 

2025

 

(Dollars in millions)

 

Interest
Rate Swaps

 

 

Cross
Currency
Interest
Rate Swaps

 

 

Private Education Loans

 

 

Private Education Loan Commitments

 

 

Interest
Rate Swaps

 

 

Cross
Currency
Interest
Rate Swaps

 

Balance, beginning of
   period

 

$

—

 

 

$

(76

)

 

$

—

 

 

$

—

 

 

$

—

 

 

$

(244

)

Total gains/(losses):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Included in earnings(1)

 

 

—

 

 

 

(38

)

 

 

11

 

 

 

12

 

 

 

—

 

 

 

142

 

Purchases(2)

 

 

—

 

 

 

—

 

 

 

226

 

 

 

—

 

 

 

—

 

 

 

—

 

Settlements(3)

 

 

—

 

 

 

19

 

 

 

(2

)

 

 

—

 

 

 

—

 

 

 

26

 

Other changes(4)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Transfers in and/or out
  of level 3

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Balance, end of period

 

$

—

 

 

$

(95

)

 

$

235

 

 

$

12

 

 

$

—

 

 

$

(76

)

Change in mark-to-
   market gains/
   (losses) relating
   to instruments
   still held at the
   reporting date(5)

 

$

—

 

 

$

(26

)

 

$

11

 

 

$

12

 

 

$

—

 

 

$

168

 

 

(1)
“Included in earnings” is comprised of the following amounts recorded in the specified line item in the consolidated statements of income:

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(Dollars in millions)

 

2026

 

 

2025

 

 

2026

 

 

2025

 

Gains (losses) on derivative and hedging activities, net

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

Interest expense

 

 

(9

)

 

 

(10

)

 

 

(38

)

 

 

142

 

Net fair value changes of loans

 

 

23

 

 

 

—

 

 

 

23

 

 

 

—

 

Total

 

$

14

 

 

$

(10

)

 

$

(15

)

 

$

142

 

(2)
Purchases for education loans represents consideration paid for loans.
(3)
Settlements for education loans represents principal payments made on loans during the period.
(4)
Other changes for education loans represents amortization of purchase premiums.
(5)
Recorded in “gains (losses) on derivative and hedging activities, net” in the consolidated statements of income for interest rate swaps. Recorded in interest expense for cross-currency interest rate swaps in fair value hedges. Recorded in "net fair value changes of loans" for Private Education Loans and Private Education Loan commitments.

 

11. Fair Value Measurements (Continued)

The following table presents the significant inputs that are unobservable or from inactive markets used in the recurring valuations of the level 3 financial instruments detailed above.

(Dollars in millions)

 

Fair Value at September 30, 2026

 

 

Valuation
Technique

 

Input

 

Weighted
Average

Education Loans

 

 

 

 

 

 

 

 

 

Private Education Loans and commitments

 

$

247

 

 

Discounted cash flow

 

Discount rate

 

6.7%

 

 

 

 

 

 

 

Constant prepayment rate

 

12.7%

 

 

 

 

 

 

 

Constant default rate

 

0.9%

Derivatives

 

 

 

 

 

 

 

 

 

Cross-currency interest rate swaps

 

 

(95

)

 

Discounted cash flow

 

Constant Prepayment Rate

 

4%

Total

 

$

152

 

 

 

 

 

 

 

The key assumptions for Private Education loans and commitments are defined as follows:

•
Discount rate – The weighted average rate at which the projected cashflows are discounted to arrive at the net present value (fair value) of the loans. An increase in the discount rate, in isolation, would result in a decrease in fair value.
•
Constant prepayment rate – the annual percentage of beginning period principal that will be paid in addition to the scheduled payment amount. An increase in the constant prepayment rate, in isolation, would result in a decrease in fair value.
•
Constant default rate – the annual percentage of beginning of period principal that will default. An increase in the constant default rate, in isolation, would result in a decrease in fair value.

The following table summarizes the fair values of our financial assets and liabilities, including derivative financial instruments.

 

 

September 30, 2026

 

 

December 31, 2025

 

(Dollars in millions)

 

Fair
Value

 

 

Carrying
Value

 

 

Difference

 

 

Fair
Value

 

 

Carrying
Value

 

 

Difference

 

Earning assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Private Education Loans at amortized cost

 

$

11,947

 

 

$

12,680

 

 

$

(733

)

 

$

15,051

 

 

$

15,451

 

 

$

(400

)

Private Education Loans at fair value

 

 

235

 

 

 

235

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Private Education Loans held for sale

 

 

2,348

 

 

 

2,339

 

 

 

9

 

 

 

—

 

 

 

—

 

 

 

—

 

FFELP Loans

 

 

25,826

 

 

 

25,898

 

 

 

(72

)

 

 

28,096

 

 

 

28,141

 

 

 

(45

)

Cash and investments

 

 

2,133

 

 

 

2,133

 

 

 

—

 

 

 

2,270

 

 

 

2,270

 

 

 

—

 

Total earning assets

 

 

42,489

 

 

 

43,285

 

 

 

(796

)

 

 

45,417

 

 

 

45,862

 

 

 

(445

)

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term borrowings

 

 

5,758

 

 

 

5,751

 

 

 

(7

)

 

 

5,084

 

 

 

5,073

 

 

 

(11

)

Long-term borrowings

 

 

36,586

 

 

 

37,429

 

 

 

843

 

 

 

40,120

 

 

 

40,633

 

 

 

513

 

Total interest-bearing liabilities

 

 

42,344

 

 

 

43,180

 

 

 

836

 

 

 

45,204

 

 

 

45,706

 

 

 

502

 

Derivative financial instruments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swaps

 

 

(6

)

 

 

(6

)

 

 

—

 

 

 

39

 

 

 

39

 

 

 

—

 

Cross-currency interest rate swaps

 

 

(95

)

 

 

(95

)

 

 

—

 

 

 

(76

)

 

 

(76

)

 

 

—

 

Excess of net asset fair value over carrying value

 

 

 

 

 

 

 

$

40

 

 

 

 

 

 

 

 

$

57

 

 

12. Commitments, Contingencies and Guarantees

We and our subsidiaries and affiliates are subject to various claims, lawsuits and other actions that arise in the normal course of business. We believe that these claims, lawsuits and other actions will not, individually or in the aggregate, have a material adverse effect on our business, financial condition or results of operations, except as otherwise disclosed. Most of these matters are claims including individual and class action lawsuits relating to loan servicing and which allege violations of state or federal laws in connection with servicing or collection activities on education loans and other debts.

In the ordinary course of our business, the Company and our subsidiaries and affiliates receive information and document requests and investigative demands from various entities including State Attorneys General, U.S. Attorneys, legislative committees, individual members of Congress and administrative agencies. These requests may be informational, regulatory or enforcement in nature and may relate to our business practices, the industries in which we operate, or companies with whom we conduct business. Generally, our practice has been and continues to be to cooperate with these bodies and to be responsive to any such requests.

The number of these inquiries and the volume of related information demands have normalized at elevated levels and therefore the Company must continue to expend time and resources to timely respond to these requests which may, depending on their outcome, result in payments of restitution, fines and penalties.

 

Contingencies

In the ordinary course of business, we and our subsidiaries are defendants in or parties to pending and threatened legal actions and proceedings including actions brought on behalf of various classes of claimants. These actions and proceedings may be based on alleged violations of consumer protection, securities, employment and other laws. In certain of these actions and proceedings, claims for substantial monetary damages are asserted against us and our subsidiaries. We and our subsidiaries are also subject to potential unasserted claims by third parties.

In the ordinary course of business, we and our subsidiaries are subject to regulatory examinations, information gathering requests, inquiries and investigations. In connection with formal and informal inquiries in these cases, we and our subsidiaries receive requests, subpoenas and orders for documents, testimony and information in connection with various aspects of our regulated activities.

In view of the inherent difficulty of predicting the outcome of litigation and regulatory matters, we may not be able to predict what the eventual outcome of the pending matters will be, what the timing or the ultimate resolution of these matters will be, or what the eventual loss, fines or penalties, if any, related to each pending matter may be.

The Company accrues a liability for litigation, regulatory matters, and unasserted contract claims when those matters present loss contingencies that are both probable and reasonably estimable. When loss contingencies are not both probable and reasonably estimable, we do not accrue a liability. Based on current knowledge, management does not believe that loss contingencies, if any, arising from pending investigations, litigation or regulatory matters will have a material adverse effect on our consolidated financial position, liquidity, results of operations or cash flows, except as otherwise disclosed.

The Company evaluates its outstanding legal and regulatory matters each reporting period and makes adjustments to the accrued liabilities for such matters, upward or downward, as appropriate, based on the relevant facts and circumstances. The Company's accrued liabilities and estimated range of possible losses pertaining to certain matters can involve significant judgment given factors such as: the varying stages of the proceedings; the existence of numerous yet to be resolved issues; the breadth of the claims (often spanning multiple years and wide ranges of business activities); unspecified damages, civil money penalties or fines and/or the novelty of the legal issues presented; and the attendant uncertainty of the various potential outcomes of such proceedings, including where the Company has made assumptions concerning future rulings by the court or other adjudicator, or about the behavior or incentives of adverse parties or regulatory authorities. Various aspects of the legal proceedings underlying these estimates will change from time to time. Actual losses therefore may vary significantly from any estimates.

 

12. Commitments, Contingencies and Guarantees (Continued)

 

Regulatory Matters

The Company has been named as defendant in a number of putative class action and other cases alleging violations of various state and federal consumer protection laws including the Telephone Consumer Protection Act (TCPA), the Consumer Financial Protection Act of 2010 (CFPA), the Fair Credit Reporting Act (FCRA), the Fair Debt Collection Practices Act (FDCPA), in adversary proceedings under the U.S. Bankruptcy Code, and various state consumer protection laws. At this point in time, the Company is unable to anticipate the timing of a resolution or the impact that these legal proceedings may have on the Company’s consolidated financial position, liquidity, results of operations or cash flows. As a result, it is not possible at this time to estimate a range of potential exposure, if any, for amounts that

may be payable in connection with these matters and loss contingency accruals have not been established. It is possible that an adverse ruling or rulings may have a material adverse impact on the Company.

In addition, Navient and its subsidiaries are subject to examination or regulation by various federal regulatory, state licensing or other regulatory agencies as part of its ordinary course of business including the SEC, CFPB, FFIEC and ED. Items or matters similar to or different from those described above may arise during the course of those examinations. We also routinely receive inquiries or requests from various regulatory entities or bodies or government agencies concerning our business or our assets. Generally, the Company endeavors to cooperate with each such inquiry or request.

 

 

13. Segment Reporting

We monitor and assess our ongoing operations and results based on the following three reportable operating segments: Consumer Lending, Federal Education Loans, and Other.

These segments meet the quantitative thresholds for reportable operating segments. Accordingly, the results of operations of these reportable operating segments are presented separately. The underlying operating segments are used by the Company’s chief operating decision maker, our chief executive officer, to manage the business, review operating performance and allocate resources, and qualify to be aggregated as part of the primary reportable operating segments. As discussed further below, we measure the profitability of our operating segments based on Core Earnings net income. Accordingly, information regarding our reportable operating segments' net income is provided on a Core Earnings basis.

Consumer Lending Segment

Navient owns and manages Private Education Loans and is the master servicer for these portfolios. Through our Earnest brand, we originate In-School Education Loans, including undergraduate and graduate products, we refinance education loans for high-quality borrowers and we intend to expand into adjacent lending products over time. "Refinance" Education Loans are loans where a borrower has refinanced their education loans, and "In-School" Education Loans are loans originally made to borrowers while they are attending school. We generate revenue primarily through net interest income on our Private Education Loan portfolio.

The following table includes asset information for our Consumer Lending segment.

(Dollars in millions)

 

September 30, 2026

 

 

December 31, 2025

 

Private Education Loans, net

 

$

15,254

 

 

$

15,451

 

Cash and investments(1)

 

 

532

 

 

 

529

 

Other

 

 

593

 

 

 

565

 

Total assets

 

$

16,379

 

 

$

16,545

 

 

(1)
Includes restricted cash and investments.

Federal Education Loans Segment

Navient owns and manages FFELP Loans and is the master servicer on this portfolio. We generate revenue primarily through net interest income on our FFELP Loans.

The following table includes asset information for our Federal Education Loans segment.

(Dollars in millions)

 

September 30, 2026

 

 

December 31, 2025

 

FFELP Loans, net

 

$

25,898

 

 

$

28,141

 

Cash and investments(1)

 

 

848

 

 

 

1,034

 

Other

 

 

1,641

 

 

 

1,681

 

Total assets

 

$

28,387

 

 

$

30,856

 

 

(1)
Includes restricted cash and investments.

 

13. Segment Reporting (Continued)

Other Segment

This segment consists of our corporate liquidity portfolio, gains and losses incurred on the repurchase of debt, unallocated shared services which include certain corporate and IT costs as well as regulatory expenses, and restructuring/other reorganization expenses. Additionally, the segment contains the revenue and expenses in connection with the transition services we performed related to the outsourcing of loan servicing and divestiture of our Business Processing segment.

Unallocated shared services expenses are comprised of costs primarily related to information technology costs related to infrastructure and operations, stock-based compensation expense, accounting, finance, legal, compliance and risk management, regulatory-related expenses, human resources, certain executive management and the Board of Directors. Regulatory-related expenses include actual settlement amounts as well as third-party professional fees we incur in connection with such regulatory matters and are presented net of any insurance reimbursements for covered costs related to such matters.

At September 30, 2026 and December 31, 2025, the Other segment had total assets of $1.4 billion and $1.3 billion, respectively.

Business Processing Segment

 

In September 2024, Navient completed the sale of Xtend, which comprised the Company's healthcare services business in its Business Processing segment. In February 2025, Navient completed the sale of its government services businesses, which constituted the remainder of the Business Processing segment. Prior to the sale of its healthcare and government services businesses, Navient provided business processing solutions such as omnichannel contact center services, workflow processing, and revenue cycle optimization.

At September 30, 2026 and December 31, 2025, the Business Processing segment had total assets of $0 and $0, respectively.

 

 

13. Segment Reporting (Continued)

Measure of Profitability

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

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.

13. Segment Reporting (Continued)

Segment Results and Reconciliations to GAAP

 

 

Three Months Ended September 30, 2026

 

 

 

 

 

 

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

 

$

651

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

270

 

 

$

381

 

 

$

—

 

 

$

—

 

Personal Loans

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

—

 

 

 

—

 

 

 

—

 

Cash and investments

 

 

17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5

 

 

 

8

 

 

 

—

 

 

 

4

 

Total interest income

 

 

669

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

276

 

 

 

389

 

 

 

—

 

 

 

4

 

Total interest expense

 

 

554

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

189

 

 

 

342

 

 

 

—

 

 

 

27

 

Net interest income
   (loss)

 

 

115

 

 

$

—

 

 

$

(4

)

 

$

(4

)

 

$

111

 

 

 

87

 

 

 

47

 

 

 

—

 

 

 

(23

)

Less: provisions for loan
   losses

 

 

227

 

 

 

 

 

 

 

 

 

 

 

 

227

 

 

 

214

 

 

 

13

 

 

 

—

 

 

 

—

 

Net interest income
   (loss) after provisions
   for loan losses

 

 

(112

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(127

)

 

 

34

 

 

 

—

 

 

 

(23

)

Other income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Servicing revenue

 

 

10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

 

8

 

 

 

—

 

 

 

—

 

Asset recovery and
   business processing
   revenue

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Other revenue

 

 

7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2

 

Gains on sales of loans

 

 

162

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

162

 

 

 

—

 

 

 

—

 

 

 

—

 

Net fair value changes of
   loans

 

 

23

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

23

 

 

 

—

 

 

 

—

 

 

 

—

 

Total other income

 

 

202

 

 

 

—

 

 

 

(5

)

 

 

(5

)

 

 

197

 

 

 

187

 

 

 

8

 

 

 

—

 

 

 

2

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct operating
   expenses

 

 

70

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

57

 

 

 

13

 

 

 

—

 

 

 

—

 

Unallocated shared
   services expenses

 

 

5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

5

 

Operating expenses(2)

 

 

75

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

75

 

 

 

57

 

 

 

13

 

 

 

—

 

 

 

5

 

Goodwill and acquired
   intangible asset
   impairment and
   amortization

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Restructuring/other
   reorganization
   expenses

 

 

2

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2

 

Total expenses

 

 

77

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

77

 

 

 

57

 

 

 

13

 

 

 

—

 

 

 

7

 

Income (loss) before
   income tax expense
   (benefit)

 

 

13

 

 

 

—

 

 

 

(9

)

 

$

(9

)

 

$

4

 

 

 

3

 

 

 

29

 

 

 

—

 

 

 

(28

)

Income tax expense
   (benefit)(3)

 

 

(2

)

 

 

—

 

 

 

3

 

 

 

3

 

 

 

1

 

 

 

1

 

 

 

7

 

 

 

—

 

 

 

(7

)

Net income (loss)

 

$

15

 

 

$

—

 

 

$

(12

)

 

$

(12

)

 

$

3

 

 

$

2

 

 

$

22

 

 

$

—

 

 

$

(21

)

 

(1)
Core Earnings adjustments to GAAP:

 

 

Three Months Ended September 30, 2026

 

(Dollars in millions)

 

Net Impact of
Derivative
Accounting

 

 

Net Impact of
Goodwill and
Acquired
Intangibles

 

 

Total

 

Net interest income (loss) after provisions for loan losses

 

$

(4

)

 

$

—

 

 

$

(4

)

Total other income

 

 

(5

)

 

 

—

 

 

 

(5

)

Goodwill and acquired intangible asset impairment and amortization

 

 

—

 

 

 

—

 

 

 

—

 

Total Core Earnings adjustments to GAAP

 

$

(9

)

 

$

—

 

 

 

(9

)

Income tax expense (benefit)

 

 

 

 

 

 

 

 

3

 

Net income (loss)

 

 

 

 

 

 

 

$

(12

)

 

(2)
Reportable segment significant operating expenses are comprised of:

 

 

 

Three Months Ended September 30, 2026

 

(Dollars in millions)

 

Consumer Lending

 

 

Federal Education Loans

 

 

Business Processing

 

 

Other

 

 

Total

 

Servicing expenses

 

$

14

 

 

$

12

 

 

$

—

 

 

$

—

 

 

$

26

 

Information technology expenses

 

 

9

 

 

 

—

 

 

 

—

 

 

 

5

 

 

 

14

 

Corporate expenses

 

 

—

 

 

 

—

 

 

 

—

 

 

 

15

 

 

 

15

 

Other/remaining expenses

 

 

34

 

 

 

1

 

 

 

—

 

 

 

(15

)

 

 

20

 

Operating expenses

 

$

57

 

 

$

13

 

 

$

—

 

 

$

5

 

 

$

75

 

 

(3)
Income taxes are based on a percentage of net income before tax for the individual reportable segment.

13. Segment Reporting (Continued)

 

 

Three Months Ended September 30, 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

 

$

760

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

276

 

 

$

484

 

 

$

—

 

 

$

—

 

Cash and investments

 

 

21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5

 

 

 

10

 

 

 

—

 

 

 

6

 

Total interest income

 

 

781

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

281

 

 

 

494

 

 

 

—

 

 

 

6

 

Total interest expense

 

 

639

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

183

 

 

 

429

 

 

 

—

 

 

 

23

 

Net interest income
   (loss)

 

 

142

 

 

$

4

 

 

$

—

 

 

$

4

 

 

$

146

 

 

 

98

 

 

 

65

 

 

 

—

 

 

 

(17

)

Less: provisions for loan
   losses

 

 

168

 

 

 

 

 

 

 

 

 

 

 

 

168

 

 

 

155

 

 

 

13

 

 

 

—

 

 

 

—

 

Net interest income
   (loss) after provisions
   for loan losses

 

 

(26

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(57

)

 

 

52

 

 

 

—

 

 

 

(17

)

Other income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Servicing revenue

 

 

13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

10

 

 

 

—

 

 

 

—

 

Asset recovery and
   business processing
   revenue

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Other revenue (loss)

 

 

6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

10

 

Total other income

 

 

19

 

 

 

(4

)

 

 

8

 

 

 

4

 

 

 

23

 

 

 

3

 

 

 

10

 

 

 

—

 

 

 

10

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct operating
   expenses

 

 

61

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

45

 

 

 

16

 

 

 

—

 

 

 

—

 

Unallocated shared
   services expenses

 

 

44

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

44

 

Operating expenses(2)

 

 

105

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

105

 

 

 

45

 

 

 

16

 

 

 

—

 

 

 

44

 

Goodwill and acquired
   intangible asset
   impairment and
   amortization

 

 

1

 

 

 

—

 

 

 

(1

)

 

 

(1

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Restructuring/other
   reorganization
   expenses

 

 

4

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4

 

Total expenses

 

 

110

 

 

 

—

 

 

 

(1

)

 

 

(1

)

 

 

109

 

 

 

45

 

 

 

16

 

 

 

—

 

 

 

48

 

Income (loss) before
   income tax expense
   (benefit)

 

 

(117

)

 

 

—

 

 

 

9

 

 

 

9

 

 

 

(108

)

 

 

(99

)

 

 

46

 

 

 

—

 

 

 

(55

)

Income tax expense
   (benefit)(3)

 

 

(31

)

 

 

—

 

 

 

6

 

 

 

6

 

 

 

(25

)

 

 

(23

)

 

 

11

 

 

 

—

 

 

 

(13

)

Net income (loss)

 

$

(86

)

 

$

—

 

 

$

3

 

 

$

3

 

 

$

(83

)

 

$

(76

)

 

$

35

 

 

$

—

 

 

$

(42

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)
Core Earnings adjustments to GAAP:

 

 

Three Months Ended September 30, 2025

 

(Dollars in millions)

 

Net Impact of
Derivative
Accounting

 

 

Net Impact of
Goodwill and
Acquired
Intangibles

 

 

Total

 

Net interest income (loss) after provisions for loan losses

 

$

4

 

 

$

—

 

 

$

4

 

Total other income

 

 

4

 

 

 

—

 

 

 

4

 

Goodwill and acquired intangible asset impairment and amortization

 

 

—

 

 

 

(1

)

 

 

(1

)

Total Core Earnings adjustments to GAAP

 

$

8

 

 

$

1

 

 

 

9

 

Income tax expense (benefit)

 

 

 

 

 

 

 

 

6

 

Net income (loss)

 

 

 

 

 

 

 

$

3

 

 

(2)
Reportable segment significant operating expenses are comprised of:

 

 

 

Three Months Ended September 30, 2025

 

(Dollars in millions)

 

Consumer Lending

 

 

Federal Education Loans

 

 

Business Processing

 

 

Other

 

 

Total

 

Servicing expenses

 

$

12

 

 

$

16

 

 

$

—

 

 

$

—

 

 

$

28

 

Information technology expenses

 

 

8

 

 

 

—

 

 

 

—

 

 

 

19

 

 

 

27

 

Corporate expenses

 

 

—

 

 

 

—

 

 

 

—

 

 

 

21

 

 

 

21

 

Other/remaining expenses

 

 

25

 

 

 

—

 

 

 

—

 

 

 

4

 

 

 

29

 

Operating expenses

 

$

45

 

 

$

16

 

 

$

—

 

 

$

44

 

 

$

105

 

 

(3)
Income taxes are based on a percentage of net income before tax for the individual reportable segment.

 

13. Segment Reporting (Continued)

 

 

 

Nine Months Ended September 30, 2026

 

 

 

 

 

 

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

 

$

1,993

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

820

 

 

$

1,173

 

 

$

—

 

 

$

—

 

Personal Loans

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

—

 

 

 

—

 

 

 

—

 

Cash and investments

 

 

51

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14

 

 

 

24

 

 

 

—

 

 

 

13

 

Total interest income

 

 

2,045

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

835

 

 

 

1,197

 

 

 

—

 

 

 

13

 

Total interest expense

 

 

1,677

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

553

 

 

 

1,056

 

 

 

—

 

 

 

79

 

Net interest income
   (loss)

 

 

368

 

 

$

3

 

 

$

(14

)

 

$

(11

)

 

$

357

 

 

 

282

 

 

 

141

 

 

 

—

 

 

 

(66

)

Less: provisions for loan
   losses

 

 

281

 

 

 

 

 

 

 

 

 

 

 

 

281

 

 

 

251

 

 

 

30

 

 

 

—

 

 

 

—

 

Net interest income
   (loss) after provisions
   for loan losses

 

 

87

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31

 

 

 

111

 

 

 

—

 

 

 

(66

)

Other income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Servicing revenue

 

 

31

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7

 

 

 

24

 

 

 

—

 

 

 

—

 

Asset recovery and
   business processing
   revenue

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Other revenue

 

 

34

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

23

 

Gains on sales of loans

 

 

162

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

162

 

 

 

—

 

 

 

—

 

 

 

—

 

Net fair value changes of
   loans

 

 

23

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

23

 

 

 

—

 

 

 

—

 

 

 

—

 

Total other income

 

 

250

 

 

 

(3

)

 

 

(8

)

 

 

(11

)

 

 

239

 

 

 

192

 

 

 

24

 

 

 

—

 

 

 

23

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct operating
   expenses

 

 

182

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

138

 

 

 

44

 

 

 

—

 

 

 

—

 

Unallocated shared
   services expenses

 

 

64

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

64

 

Operating expenses(2)

 

 

246

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

246

 

 

 

138

 

 

 

44

 

 

 

—

 

 

 

64

 

Goodwill and acquired
   intangible asset
   impairment and
   amortization

 

 

5

 

 

 

—

 

 

 

(5

)

 

 

(5

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Restructuring/other
   reorganization
   expenses

 

 

4

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4

 

Total expenses

 

 

255

 

 

 

—

 

 

 

(5

)

 

 

(5

)

 

 

250

 

 

 

138

 

 

 

44

 

 

 

—

 

 

 

68

 

Income (loss) before
   income tax expense
   (benefit)

 

 

82

 

 

 

—

 

 

 

(17

)

 

 

(17

)

 

 

65

 

 

 

85

 

 

 

91

 

 

 

—

 

 

 

(111

)

Income tax expense
   (benefit)(3)

 

 

26

 

 

 

—

 

 

 

(11

)

 

 

(11

)

 

 

15

 

 

 

20

 

 

 

21

 

 

 

—

 

 

 

(26

)

Net income (loss)

 

$

56

 

 

$

—

 

 

$

(6

)

 

$

(6

)

 

$

50

 

 

$

65

 

 

$

70

 

 

$

—

 

 

$

(85

)

 

(1)
Core Earnings adjustments to GAAP:

 

 

 

Nine Months Ended September 30, 2026

 

(Dollars in millions)

 

Net Impact of
Derivative
Accounting

 

 

Net Impact of
Goodwill and
Acquired
Intangibles

 

 

Total

 

Net interest income (loss) after provisions for loan losses

 

$

(11

)

 

$

—

 

 

$

(11

)

Total other income

 

 

(11

)

 

 

—

 

 

 

(11

)

Goodwill and acquired intangible asset impairment and amortization

 

 

—

 

 

 

(5

)

 

 

(5

)

Total Core Earnings adjustments to GAAP

 

$

(22

)

 

$

5

 

 

 

(17

)

Income tax expense (benefit)

 

 

 

 

 

 

 

 

(11

)

Net income (loss)

 

 

 

 

 

 

 

$

(6

)

 

(2)
Reportable segment significant operating expenses are comprised of:

 

 

 

Nine Months Ended September 30, 2026

 

(Dollars in millions)

 

Consumer Lending

 

 

Federal Education Loans

 

 

Business Processing

 

 

Other

 

 

Total

 

Servicing expenses

 

$

41

 

 

$

42

 

 

$

—

 

 

$

—

 

 

$

83

 

Information technology expenses

 

 

29

 

 

 

—

 

 

 

—

 

 

 

21

 

 

 

50

 

Corporate expenses

 

 

1

 

 

 

1

 

 

 

—

 

 

 

54

 

 

 

56

 

Other/remaining expenses

 

 

67

 

 

 

1

 

 

 

—

 

 

 

(11

)

 

 

57

 

Operating expenses

 

$

138

 

 

$

44

 

 

$

—

 

 

$

64

 

 

$

246

 

 

(3)
Income taxes are based on a percentage of net income before tax for the individual reportable segment.

 

13. Segment Reporting (Continued)

 

 

 

Nine Months Ended September 30, 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

 

$

2,297

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

838

 

 

$

1,459

 

 

$

—

 

 

$

—

 

Cash and investments

 

 

64

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15

 

 

 

30

 

 

 

—

 

 

 

19

 

Total interest income

 

 

2,361

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

853

 

 

 

1,489

 

 

 

—

 

 

 

19

 

Total interest expense

 

 

1,961

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

547

 

 

 

1,321

 

 

 

—

 

 

 

72

 

Net interest income
   (loss)

 

 

400

 

 

$

15

 

 

$

6

 

 

$

21

 

 

$

421

 

 

 

306

 

 

 

168

 

 

 

—

 

 

 

(53

)

Less: provisions for loan
   losses

 

 

236

 

 

 

 

 

 

 

 

 

 

 

 

236

 

 

 

207

 

 

 

29

 

 

 

—

 

 

 

—

 

Net interest income
   (loss) after provisions
   for loan losses

 

 

164

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

99

 

 

 

139

 

 

 

—

 

 

 

(53

)

Other income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Servicing revenue

 

 

40

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8

 

 

 

32

 

 

 

—

 

 

 

—

 

Asset recovery and
   business processing
   revenue

 

 

23

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

23

 

 

 

—

 

Other revenue (loss)

 

 

10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

(1

)

 

 

—

 

 

 

44

 

Total other income

 

 

73

 

 

 

(15

)

 

 

49

 

 

 

34

 

 

 

107

 

 

 

9

 

 

 

31

 

 

 

23

 

 

 

44

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct operating
   expenses

 

 

189

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

115

 

 

 

54

 

 

 

20

 

 

 

—

 

Unallocated shared
   services expenses

 

 

144

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

144

 

Operating expenses(2)

 

 

333

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

333

 

 

 

115

 

 

 

54

 

 

 

20

 

 

 

144

 

Goodwill and acquired
   intangible asset
   impairment and
   amortization

 

 

2

 

 

 

—

 

 

 

(2

)

 

 

(2

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Restructuring/other
   reorganization
   expenses

 

 

6

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

6

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

6

 

Total expenses

 

 

341

 

 

 

—

 

 

 

(2

)

 

 

(2

)

 

 

339

 

 

 

115

 

 

 

54

 

 

 

20

 

 

 

150

 

Income (loss) before
   income tax expense
   (benefit)

 

 

(104

)

 

 

—

 

 

 

57

 

 

 

57

 

 

 

(47

)

 

 

(7

)

 

 

116

 

 

 

3

 

 

 

(159

)

Income tax expense
   (benefit)(3)

 

 

(29

)

 

 

—

 

 

 

18

 

 

 

18

 

 

 

(11

)

 

 

(3

)

 

 

27

 

 

 

1

 

 

 

(36

)

Net income (loss)

 

$

(75

)

 

$

—

 

 

$

39

 

 

$

39

 

 

$

(36

)

 

$

(4

)

 

$

89

 

 

$

2

 

 

$

(123

)

 

(1)
Core Earnings adjustments to GAAP:

 

 

 

Nine Months Ended September 30, 2025

 

(Dollars in millions)

 

Net Impact of
Derivative
Accounting

 

 

Net Impact of
Goodwill and
Acquired
Intangibles

 

 

Total

 

Net interest income (loss) after provisions for loan losses

 

$

21

 

 

$

—

 

 

$

21

 

Total other income

 

 

34

 

 

 

—

 

 

 

34

 

Goodwill and acquired intangible asset impairment and amortization

 

 

—

 

 

 

(2

)

 

 

(2

)

Total Core Earnings adjustments to GAAP

 

$

55

 

 

$

2

 

 

 

57

 

Income tax expense (benefit)

 

 

 

 

 

 

 

 

18

 

Net income (loss)

 

 

 

 

 

 

 

$

39

 

 

(2)
Reportable segment significant operating expenses are comprised of:

 

 

 

Nine Months Ended September 30, 2025

 

(Dollars in millions)

 

Consumer Lending

 

 

Federal Education Loans

 

 

Business Processing

 

 

Other

 

 

Total

 

Servicing expenses

 

$

40

 

 

$

50

 

 

$

—

 

 

$

5

 

 

$

95

 

Information technology expenses

 

 

25

 

 

 

—

 

 

 

1

 

 

 

60

 

 

 

86

 

Corporate expenses

 

 

1

 

 

 

2

 

 

 

—

 

 

 

64

 

 

 

67

 

Other/remaining expenses

 

 

49

 

 

 

2

 

 

 

19

 

 

 

15

 

 

 

85

 

Operating expenses

 

$

115

 

 

$

54

 

 

$

20

 

 

$

144

 

 

$

333

 

 

(3)
Income taxes are based on a percentage of net income before tax for the individual reportable segment.

 

 

13. Segment Reporting (Continued)

 

 

Summary of Core Earnings Adjustments to GAAP

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(Dollars in millions)

 

2026

 

 

2025

 

 

2026

 

 

2025

 

GAAP net income

 

$

15

 

 

$

(86

)

 

$

56

 

 

$

(75

)

Core Earnings adjustments to GAAP:

 

 

 

 

 

 

 

 

 

 

 

 

Net impact of derivative accounting(1)

 

 

(9

)

 

 

8

 

 

 

(22

)

 

 

55

 

Net impact of goodwill and acquired
  intangible assets(2)

 

 

—

 

 

 

1

 

 

 

5

 

 

 

2

 

Net tax effect(3)

 

 

(3

)

 

 

(6

)

 

 

11

 

 

 

(18

)

Total Core Earnings adjustments to GAAP

 

 

(12

)

 

 

3

 

 

 

(6

)

 

 

39

 

Core Earnings net income

 

$

3

 

 

$

(83

)

 

$

50

 

 

$

(36

)

(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.
(2)
Goodwill and acquired intangible assets: Our Core Earnings exclude goodwill and intangible asset impairment and amortization of acquired intangible assets.
(3)
Net tax effect: Such tax effect is based upon our Core Earnings effective tax rate for the year.

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

 

NAVIENT HOLDINGS, INC.

(Registrant)

 

 

By:

 

 /s/ STEVE HAUBER

 

 

Steve Hauber

 

 

Chief Financial Officer

 

 

(Principal Financial and Accounting Officer)

 

Date: November 4, 2026

APPENDIX A

form 10-Q cross-reference index

 

 

Page

Number

 

 

Part I. Financial Information

 

 

 

 

 

 

Item 1.

Financial Statements

46-85

 

 

 

Item 2.

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

7-38

 

 

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

40-43

 

 

 

Item 4.

Controls and Procedures

44

 

 

Part II. Other Information

 

 

 

 

Item 1.

Legal Proceedings

39, 76

 

 

 

Item 1A.

Risk Factors

39

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

43

 

 

 

Item 3.

Defaults Upon Senior Securities

Not Applicable

 

 

 

Item 4.

Mine Safety Disclosures

Not Applicable

 

 

 

Item 5.

Other Information

44

 

 

 

Item 6.

Exhibits

45

 

 

 

Signatures

 

86