UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-36228

Navient Corporation

(Exact name of registrant as specified in its charter)

Delaware	46-4054283
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
13865 Sunrise Valley Drive, Herndon, Virginia 20171	(703) 810-3000
(Address of principal executive offices)	(Telephone Number)

(703) 810-3000

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

Securities registered pursuant to Section 12(b) of the Act.

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $.01 per share	NAVI	The NASDAQ Global Select Market
6% Senior Notes due December 15, 2043	JSM	The NASDAQ Global Select Market
Preferred Stock Purchase Rights	None	The NASDAQ Global Select Market

As of June 30, 2025, there were 99,431,038 shares of common stock outstanding.

TABLE OF CONTENTS

Organization of Our Form 10-Q

The order and presentation of content in our Quarterly Report on Form 10-Q (Form 10-Q) differs from the traditional Securities and Exchange Commission (SEC) Form 10-Q format. Our format is designed to improve readability and to better present how we organize and manage our business. See Appendix A, "Form 10-Q Cross-Reference Index" for a cross-reference index to the traditional SEC Form 10-Q format.

	Page Number
Forward-Looking and Cautionary Statements	1
Use of Non-GAAP Financial Measures	2
Business	3
Overview and Fundamentals of Our Business	3
Recent Business Developments	5
How We Organize Our Business	5
Management’s Discussion and Analysis of Financial Condition and Results of Operations	7
Selected Historical Financial Information and Ratios	7
The Quarter in Review	8
Results of Operations	9
Segment Results	12
Financial Condition	19
Liquidity and Capital Resources	24
Critical Accounting Policies and Estimates	27
Non-GAAP Financial Measures	27
Legal Proceedings	37
Risk Factors	37
Quantitative and Qualitative Disclosures about Market Risk	38
Unregistered Sales of Equity Securities and Use of Proceeds	41
Controls and Procedures	42
Exhibits	43
Financial Statements	44
Signatures	79
Appendix A – Form 10-Q Cross-Reference Index	80

FORWARD-LOOKING AND CAUTIONARY STATEMENTS

This Form 10-Q contains “forward-looking” statements and other information that is based on management’s current expectations as of the date of this report. Statements that are not historical facts, including statements about our beliefs, opinions, or expectations and statements that assume or are dependent upon future events, are forward-looking statements and often contain words such as “expect,” “assume,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” “may,” “could,” “should,” “goals,” or “target.” Such statements are based on management's expectations as of the date of this filing and involve many risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. Such risks and uncertainties are discussed more fully under the section titled “Risk Factors” and include, but are not limited to the following:

•general economic conditions, including the potential impact of inflation and interest rates on Navient and its clients and customers and on the creditworthiness of third parties;

•increased defaults on education loans held by us;

•unanticipated repayment trends on education loans including prepayments or deferrals resulting from new interpretations or the timing of the execution and implementation of current laws, rules or regulations or future laws, executive orders or other policy initiatives that operate to encourage or require consolidation, abolish existing or create additional income-based repayment or debt forgiveness programs or establish other policies and programs which may increase or decrease the prepayment rates on education loans and accelerate or slow down the repayment of the bonds in our securitization trusts;

•a reduction in our credit ratings;

•changes to applicable laws, rules, regulations and government policies, as well as changing regulatory and governmental oversight;

•changes in the general interest rate environment, including the availability of any relevant money-market index rate or the relationship between the relevant money-market index rate and the rate at which our assets are priced;

•the interest rate characteristics of our assets do not always match those of our funding arrangements;

•adverse market conditions or an inability to effectively manage our liquidity risk or access liquidity could negatively impact us;

•the cost and availability of funding in the capital markets;

•our ability to earn Floor Income and our ability to enter into hedges relative to that Floor Income are dependent on the future interest rate environment and therefore is variable;

•our use of derivatives exposes us to credit and market risk;

•our ability to continually and effectively align our cost structure with our business operations;

•a failure or breach of our operating systems, infrastructure or information technology systems;

•failure by any third party providing us material services or products or a breach or violation of law by one of these third parties;

•our current or previous work with government clients exposes us to additional risks inherent in the government contracting environment;

•acquisitions, strategic initiatives and investments or divestitures that we pursue;

•shareholder activism; and

•reputational risk and social factors.

Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Readers are urged to carefully review and consider the various disclosures made in this Form 10-Q and in other documents we file from time to time with the SEC that disclose risks and uncertainties that may affect our business.

The preparation of our consolidated financial statements also requires management to make certain estimates and assumptions including estimates and assumptions about future events. These estimates or assumptions may prove to be incorrect and actual results could differ materially. All forward-looking statements contained in this report are qualified by these cautionary statements and are made only as of the date of this report. We do not undertake any obligation to update or revise these forward-looking statements except as required by law.

Through this discussion and analysis, we intend to provide the reader with some narrative context for how our management views our consolidated financial statements, additional context within which to assess our operating results, and information on the quality and variability of our earnings, liquidity and cash flows.

1

USE OF NON-GAAP FINANCIAL MEASURES

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

In addition to Core Earnings, we present the following other non-GAAP financial measures: Tangible Equity, Adjusted Tangible Equity Ratio, Earnings before Interest, Taxes, Depreciation and Amortization Expense (EBITDA) (for the Business Processing segment), and Allowance for Loan Losses Excluding Expected Future Recoveries on Previously Fully Charged-off Loans. Definitions for the non-GAAP financial measures and reconciliations are provided below, except that reconciliations of forward-looking non-GAAP financial measures are not provided because the Company is unable to provide such reconciliations without unreasonable effort due to the uncertainty and inherent difficulty of predicting the occurrence and financial impact of certain items, including, but not limited to, the impact of any mark-to-market gains/losses resulting from our use of derivative instruments to hedge our economic risks. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Non-GAAP Financial Measures” for a further discussion and a complete reconciliation between GAAP net income and Core Earnings.

2

Business

Overview and Fundamentals of Our Business

Navient (Nasdaq: NAVI) helps students and families confidently manage the cost of higher education. We create long-term value for customers and investors through responsible lending, flexible refinancing, trusted servicing oversight, and decades of portfolio management expertise. Our employees thrive in a culture of belonging, where they are supported and proud to deliver meaningful outcomes. Learn more on Navient.com.

With a focus on data-driven insights, service, compliance and innovative support, Navient’s business consists of:

•Federal Education Loans

We own and manage a portfolio of $29.6 billion of federally guaranteed Federal Family Education Loan Program (FFELP) Loans. We support the success of our customers and ensure a compliant, efficient customer experience.

•Consumer Lending

We own and manage a portfolio of $15.5 billion of Private Education Loans. Through our Earnest brand we also refinance and originate Private Education Loans. We help students and families succeed through the college journey with innovative planning tools, student loans and refinancing products through our Earnest brand. In the first half of 2025, we originated $1.0 billion of Private Education Loans, an 87% increase from $538 million a year ago.

Navient previously provided both healthcare and government business processing services. Our healthcare services business was sold in September 2024 and our government services business was sold in February 2025, marking the end of Navient providing business processing solutions. See "Recent Business Developments" for more detail.

Maximizing Cash Flows from Loan Portfolios and Maintaining a Strong Balance Sheet

Our second-quarter 2025 results continue to demonstrate the strength of our balance sheet, credit risk management and underwriting of high-quality private education loans with attractive economics.

By optimizing capital adequacy and allocating capital to highly accretive opportunities, including organic growth and acquisitions, we remain well positioned to pay dividends and repurchase stock, while maintaining appropriate leverage that supports our credit ratings and ensures ongoing access to capital markets.

In December 2021, our Board of Directors approved a share repurchase program authorizing the purchase of up to $1 billion of the Company’s outstanding common stock. At June 30, 2025, $52 million remained in share repurchase authorization.

3

To inform our capital allocation decisions, we use the Adjusted Tangible Equity Ratio(1) in addition to other metrics. Our GAAP equity-to-asset ratio was 5.1% and our Adjusted Tangible Equity Ratio(1) was 9.8% as of June 30, 2025.

(Dollars and shares in millions)	Q2-25			Q2-24
Shares repurchased		1.9			2.5
Reduction in shares outstanding		2	%		2	%
Total repurchases in dollars	$	24		$	38
Dividends paid	$	16		$	17
Total Capital Returned(2)	$	40		$	55
GAAP equity-to-asset ratio		5.1	%		4.9	%
Adjusted Tangible Equity Ratio(1)		9.8	%		8.2	%

Commitment to Corporate Social Responsibility and Compliance

We maintain a robust, multi-layered compliance management system and thoroughly understand and comply with applicable federal, state, and local laws. We follow the industry-leading “Three Lines Model” compliance framework. This framework and other compliance protocols ensure we adhere to key industry laws and regulations including but not limited to: Fair and Accurate Credit Transactions Act (FACTA); Fair Credit Reporting Act (FCRA); Fair Debt Collection Practices Act (FDCPA); Electronic Funds Transfer Act (EFTA); Equal Credit Opportunity Act (ECOA); Gramm-Leach-Bliley Act (GLBA); Health Insurance Portability and Accountability Act (HIPAA); IRS Publication 1075; Servicemembers Civil Relief Act (SCRA); Military Lending Act (MLA); Telephone Consumer Protection Act (TCPA); Truth in Lending Act (TILA); Unfair, Deceptive, or Abusive Acts and Practices (UDAAP); state laws; and state and city licensing.

We are committed to contributing to the social and economic wellbeing of our communities; fostering the success of our customers; supporting a culture of integrity and inclusion in our workforce; and embracing sustainable business practices. Navient has earned recognition from a variety of leading organizations for our continued commitment to social responsibility. Our employees are engaged in our communities through company-sponsored volunteering and philanthropic programs.

Navient is committed to a sustainable future. We leverage technologies that minimize energy use in our office buildings and promote widespread adoption of “paperless” digital customer communications. Navient prioritizes the usage of power-saving features to our buildings to reduce energy usage. Energy efficiency and reducing carbon dioxide (CO2) and CO2 equivalents are among the many factors considered in our real estate decisions.

(1)Item is a non-GAAP financial measure. For a description and reconciliation, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Non-GAAP Financial Measures.”

(2)Capital Returned is defined as share repurchases and dividends paid.

4

Recent Business Developments

On January 30, 2024, as a result of an in-depth review of our business, Navient announced strategic actions to simplify our company, reduce our expense base, and enhance our flexibility. We have made substantial progress on these actions. We adopted a variable, outsourced servicing model when MOHELA began servicing our loan portfolio in July 2024. We completed the divestiture of our Business Processing segment business with our healthcare services business sold in September 2024 and our government services business sold in February 2025. In conjunction with the decision to outsource student loan servicing, divesting the Business Processing segment increased the opportunities for shared cost reduction. Along with the above actions, we are also reshaping our shared services functions and corporate footprint to align with the needs of a more focused, flexible and streamlined company. The $42 million of restructuring and other reorganization charges recognized in 2024 and the first half of 2025 (the vast majority of which relates to severance in connection with job abolishments) reflects the progress made to date in connection with this effort. As of June 30, 2025, we have reduced our headcount by over 80% since the beginning of 2024.

In 2025, as it relates to the above strategic actions:

•We are providing transition services related to the outsourcing of servicing and divestiture of the Business Processing segment. The transition services related to the outsourcing of servicing and the sale of our healthcare services business ended in May 2025. We expect the transition services related to our government services business to be mostly completed by the end of 2025.

•We expect to have additional cost saving initiatives implemented which will further reduce our operating costs mostly in connection with our shared service functions and corporate footprint.

•We are executing on enhancing the value of our growth business related to in-school and refinance Private Education Loan originations, investing in capabilities to grow high-quality originations that generate targeted returns. In the first half of 2025, total originations nearly doubled to $1.0 billion compared to $538 million a year ago and almost tripled from our originations of $366 million just two years ago.

How We Organize Our Business

Today we operate our business in two primary segments: Federal Education Loans and Consumer Lending. As of February 2025, we had divested our Business Processing segment.

5

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.

Consumer Lending Segment

Navient owns and manages Private Education Loans and is the master servicer for these portfolios. Through our Earnest brand, we also refinance and originate in-school Private Education Loans. "Refinance" Private Education Loans are loans where a borrower has refinanced their education loans, and "In-school" Private Education Loans are loans originally made to borrowers while they are attending school. We generate revenue primarily through net interest income on our Private Education Loan portfolio.

Through our Earnest brand, we help students and families in the planning and paying for college journey. Our digital tools empower people to find scholarships and compare financial aid offers. We believe our 50 years of experience, product design, digital marketing strategies, and origination and servicing expertise provide a unique competitive advantage. We see meaningful growth opportunities in originating Private Education Loans, generating attractive long-term, risk-adjusted returns.

The passage of new legislation on July 3, 2025 (the "Big Beautiful Bill") marks a significant shift in federal student lending programs, notably eliminating the GradPLUS loan program effective July 1, 2026. This development is anticipated to drive increased demand for private in-school graduate loans, presenting a unique loan origination growth opportunity for Navient. With our disciplined approach to growing in-school volume with a focus on graduate borrowers, we are well-positioned to capture our share of this expanded market.

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 constitutes 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. We leveraged the same expertise and intelligent tools we use to deliver successful results for portfolios we own. Our support enabled our clients to ensure better constituent outcomes, meet rapidly changing needs, improve technology, reduce operating expenses, manage risk and optimize revenue opportunities. Our clients included:

•Government: We offered our solutions to federal agencies, state governments, tolling and parking authorities, and other public sector clients.

•Healthcare: Our clients included hospitals, hospital systems, medical centers, large physician groups, other healthcare providers and public health departments.

Other Segment

This segment consists of our corporate liquidity portfolio, gains and losses incurred on the repurchase of debt, unallocated expenses of shared services (which includes regulatory expenses) and restructuring/other reorganization expenses. Additionally, the segment contains the revenue and expenses in connection with the transition services we are performing related to the outsourcing of servicing and divestiture of our Business Processing segment discussed under "Recent Business Developments."

6

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

Selected Historical Financial Information and Ratios

	Three Months Ended June 30,						Six Months Ended June 30,
(In millions, except per share data)	2025			2024			2025			2024
GAAP Basis
Net income	$	14		$	36		$	11		$	109
Diluted earnings per common share	$	.13		$	.32		$	.11		$	.97
Weighted average shares used to compute diluted    earnings per share		101			112			102			113
Return on assets		.11	%		.26	%		.05	%		.39	%
Core Earnings Basis(1)
Net income(1)	$	21		$	33		$	47		$	86
Diluted earnings per common share(1)	$	.20		$	.29		$	.46		$	.77
Weighted average shares used to compute diluted    earnings per share		101			112			102			113
Net interest margin, Federal Education Loans segment		.70	%		.36	%		.66	%		.46	%
Net interest margin, Consumer Lending segment		2.32	%		2.89	%		2.54	%		2.94	%
Return on assets		.17	%		.24	%		.19	%		.31	%
Education Loan Portfolios
Ending FFELP Loans, net	$	29,618		$	32,940		$	29,618		$	32,940
Ending Private Education Loans, net		15,530			16,238			15,530			16,238
Ending total education loans, net	$	45,148		$	49,178		$	45,148		$	49,178
Average FFELP Loans	$	30,327		$	34,741		$	30,619		$	35,950
Average Private Education Loans		15,992			16,936			16,075			17,160
Average total education loans	$	46,319		$	51,677		$	46,694		$	53,110

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

7

The Quarter in Review

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

Second-quarter 2025 net income was $14 million ($0.13 diluted earnings per share), compared with net income of $36 million ($0.32 diluted earnings per share) for the year-ago quarter. See “Results of Operations — GAAP Comparison of Second-Quarter 2025 Results with Second-Quarter 2024” for a discussion of the primary contributors to the change in GAAP earnings between periods.

Second-quarter 2025 Core Earnings net income was $21 million ($0.20 diluted Core Earnings per share), compared with $33 million ($0.29 diluted Core Earnings per share) for the year-ago quarter. See “Segment Results” for a discussion of the primary contributors to the change in Core Earnings between periods.

GAAP and Core Earnings results included:

•Provision for loan losses of $37 million ($8 million for FFELP and $29 million for Consumer Lending). The $23 million increase from the year-ago quarter is a result of increased originations, a weakening in the forecasted macroeconomic outlook, higher delinquencies as well as the extension of the FFELP portfolio.

•Regulatory and restructuring expenses of $1 million ($0.01 diluted loss per share).

Financial highlights of second-quarter 2025 include:

Federal Education Loans segment:

•Net income of $30 million.

•Net interest margin of 0.70%.

•FFELP Loan prepayments of $228 million compared to $2.5 billion in second-quarter 2024.

Consumer Lending segment:

•Net income of $26 million.

•Net interest margin of 2.32%.

•Originated $500 million of Private Education Loans.

Business Processing segment:

•Navient no longer provides business processing segment services after the sale in February 2025 of the government services business.

Capital, funding and liquidity:

•GAAP equity-to-asset ratio of 5.1% and adjusted tangible equity ratio(1) of 9.8%.

•Repurchased $24 million of common shares. $52 million common share repurchase authority remains outstanding.

•Paid $16 million in common stock dividends.

•Issued $500 million of unsecured debt and $536 million of asset-backed securities.

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

8

Operating Expenses:

•Operating expenses of $100 million, of which $13 million is in connection with transition services we have provided related to our various strategic initiatives. There is $14 million of revenue recognized in Other revenue related to these services.

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

ended in May 2025. We expect the transition services related to the sale of our government services business to

be mostly completed by the end of 2025.

Results of Operations

GAAP Income Statements (Unaudited)

	Three Months Ended June 30,					Increase (Decrease)						Six Months Ended June 30,					Increase (Decrease)
(In millions, except per share data)	2025			2024		$			%			2025			2024		$			%
Interest income
FFELP Loans	$	483		$	608	$	(125	)		(21	)%	$	975		$	1,269	$	(294	)		(23	)%
Private Education Loans		273			317		(44	)		(14	)		562			645		(83	)		(13	)
Cash and investments		22			48		(26	)		(54	)		43			86		(43	)		(50	)
Total interest income		778			973		(195	)		(20	)		1,580			2,000		(420	)		(21	)
Total interest expense		650			843		(193	)		(23	)		1,322			1,718		(396	)		(23	)
Net interest income		128			130		(2	)		(2	)		258			282		(24	)		(9	)
Less: provisions for loan losses		37			14		23			164			67			26		41			158
Net interest income after    provisions for loan losses		91			116		(25	)		(22	)		191			256		(65	)		(25	)
Other income (loss):
Servicing revenue		14			18		(4	)		(22	)		27			35		(8	)		(23	)
Asset recovery and business     processing revenue		—			81		(81	)		(100	)		23			158		(135	)		(85	)
Other income		19			4		15			375			33			13		20			154
Gains (losses) on derivative and     hedging activities, net		(5	)		14		(19	)		(136	)		(30	)		46		(76	)		(165	)
Total other income		28			117		(89	)		(76	)		53			252		(199	)		(79	)
Expenses:
Operating expenses		100			166		(66	)		(40	)		227			350		(123	)		(35	)
Goodwill and acquired intangible       assets impairment and       amortization expense		1			3		(2	)		(67	)		2			5		(3	)		(60	)
Restructuring/other       reorganization expenses		—			16		(16	)		(100	)		3			17		(14	)		(82	)
Total expenses		101			185		(84	)		(45	)		232			372		(140	)		(38	)
Income before income tax expense		18			48		(30	)		(63	)		12			136		(124	)		(91	)
Income tax expense		4			12		(8	)		(67	)		1			27		(26	)		(96	)
Net income	$	14		$	36	$	(22	)		(61	)%	$	11		$	109	$	(98	)		(90	)%
Basic earnings per    common share	$	.14		$	.32	$	(.18	)		(56	)%	$	.11		$	.98	$	(.87	)		(89	)%
Diluted earnings per    common share	$	.13		$	.32	$	(.19	)		(59	)%	$	.11		$	.97	$	(.86	)		(89	)%
Dividends per common share	$	.16		$	.16	$	—			—		$	.32		$	.32	$	—			—

9

GAAP Comparison of Second-Quarter 2025 Results with Second-Quarter 2024

For the three months ended June 30, 2025, net income was $14 million, or $0.13 diluted earnings per common share, compared with net income of $36 million, or $0.32 diluted earnings per common share, for the year-ago period.

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

• Net interest income decreased by $2 million primarily as a result of the paydown of the FFELP and Private Education Loan portfolios, and increased reserving for the increase in accrued interest receivable on Private Education Loans greater than 90-days delinquent. This decrease was partially offset by a $22 million decline in premium amortization on the FFELP Loan portfolio due to the significant decrease in prepayments from $2.5 billion in the year-ago period to $228 million in the current period.

• Provisions for loan losses increased $23 million from $14 million to $37 million:

○ The provision for FFELP Loan losses increased $10 million from $(2) million to $8 million.

○ The provision for Private Education Loan losses increased $13 million from $16 million to $29 million.

The provision for FFELP Loan losses of $8 million in the current period was primarily the result of an increase in delinquency balances. The provision of $(2) million in the year-ago quarter was the result of stable credit trends.

The provision for Private Education Loan losses of $29 million in the current period included $7 million in connection with loan originations and $22 million related to a general reserve build (primarily as a result of an increase in delinquency balances as well as a weakening in the forecasted macroeconomic metrics used to estimate expected losses). The provision of $16 million in the year-ago quarter included $6 million in connection with loan originations and $10 million related to a general reserve build.

• Asset recovery and business processing revenue decreased $81 million as a result of the sale of our healthcare services business in the third quarter of 2024 ($32 million of the decrease), and our government services business in February 2025 ($49 million of the decrease). With the sale of our government services business, Navient no longer provides business processing segment services.

• Other income increased $15 million primarily related to the transition services we provide related to our various strategic initiatives. The transition services related to the outsourcing of servicing and the sale of our healthcare services business ended in May 2025. We expect the transition services related to the sale of our government services business to be mostly completed by the end of 2025.

• Net gains on derivative and hedging activities decreased $19 million. The primary factor affecting the change was interest rate fluctuations. Valuations of derivative instruments fluctuate based upon many factors including changes in interest rates and other market factors. As a result, net gains and losses on derivative and hedging activities may vary significantly in future periods.

• Operating expenses decreased $66 million, $74 million of which was due to a decline in business processing expenses as a result of the sale of our government services business in February 2025 and our healthcare services business in the third quarter of 2024 ($62 million of the reduction is in the Business Processing segment and $12 million of the reduction is in the Other segment). In addition, regulatory-related expenses decreased $11 million due to a $12 million contingency loss accrual recorded in the year-ago quarter related to the September 2024 CFPB settlement agreement. Current period expense includes $13 million incurred in connection with providing transition services related to our various strategic initiatives. We expect these services to be mostly completed by the end of 2025. There is $14 million of revenue recognized in Other revenue related to these services.

• Restructuring and other reorganization expenses decreased $16 primarily due to a decrease in severance-related costs in connection with the various strategic initiatives being implemented to simplify the company, reduce our expense base and enhance our flexibility.

We repurchased 1.9 million and 2.5 million shares of our common stock during the second quarters of 2025 and 2024, respectively. As a result of repurchases, our average outstanding diluted shares decreased by 11 million common shares (or 10%) from the year-ago period.

10

GAAP Comparison of Six Months Ended June 30, 2025 Results with Six Months Ended June 30, 2024

For the six months ended June 30, 2025, net income was $11 million, or $0.11 diluted earnings per common share, compared with net income of $109 million, or $0.97 diluted earnings per common share, for the year-ago period.

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

• Net interest income decreased by $24 million primarily as a result of the paydown of the FFELP and Private Education Loan portfolios, the impact of decreasing interest rates on the different index resets for the FFELP Loan and Private Education Loan assets and debt, as well as a $7 million decrease in mark-to-market gains on fair value hedges recorded in interest expense. This decrease was partially offset by a $40 million decline in premium amortization on the FFELP Loan portfolio due to the significant decrease in prepayments from $4.1 billion in the year-ago period to $485 million in the current period.

• Provisions for loan losses increased $41 million, from $26 million to $67 million:

○ The provision for FFELP Loan losses increased $17 million from $(1) million to $16 million.

○ The provision for Private Education Loan losses increased $24 million from $27 million to $51 million.

The provision for FFELP Loan losses of $16 million in the current period was primarily the result of an increase in delinquency balances. The provision of $(1) million in the year-ago period was the result of stable credit trends.

The provision for Private Education Loan losses of $51 million in the current period included $14 million in connection with loan originations and $37 million related to a general reserve build (primarily as a result of an increase in delinquency balances as well as a weakening in the forecasted macroeconomic metrics used to estimate expected losses). The provision of $27 million in the year-ago period included $11 million in connection with loan originations and $16 million related to a general reserve build.

• Asset recovery and business processing revenue decreased $135 million as a result of the sale of our healthcare services business in the third quarter of 2024 ($61 million of the decrease), and our government services business in February 2025 ($74 million of the decrease). With the sale of our government services business, Navient no longer provides business processing segment services.

• Other income increased $20 million primarily related to the transition services we provide related to our various strategic initiatives. The transition services related to the outsourcing of servicing and the sale of our healthcare services business ended in May 2025. We expect the transition services related to the sale of our government services business to be mostly completed by the end of 2025.

• Net gains on derivative and hedging activities decreased $76 million. The primary factor affecting the change was interest rate fluctuations. Valuations of derivative instruments fluctuate based upon many factors including changes in interest rates and other market factors. As a result, net gains and losses on derivative and hedging activities may vary significantly in future periods.

• Operating expenses decreased $123 million, $132 million of which was due to a decline in business processing expenses as a result of the sale of our government services business in February 2025 and our healthcare services business in the third quarter of 2024 ($111 million of the reduction is in the Business Processing segment and $21 million of the reduction is in the Other segment). In addition, regulatory-related expenses decreased $23 million due to a $32 million contingency loss accrual recorded in the year-ago period related to the September 2024 CFPB settlement agreement. Current period expense includes $23 million incurred in connection with providing transition services related to our various strategic initiatives. We expect these services to be mostly completed by the end of 2025. There is $25 million of revenue recognized in Other revenue related to these services.

• Restructuring and other reorganization expenses decreased $14 million primarily due to a decrease in severance-related costs in connection with the various strategic initiatives being implemented to simplify the company, reduce our expense base and enhance our flexibility.

• The effective income tax rates for the current and year-ago periods were 9% and 20%, respectively. The movement in the effective income tax rate was primarily driven by state tax expense in connection with uncertain tax positions as well as changes in the valuation allowance attributed to disallowed interest expense carryovers.

We repurchased 4.5 million and 5.0 million shares of our common stock during the six months ended of June 30, 2025 and 2024, respectively. As a result of repurchases, our average outstanding diluted shares decreased by 11 million common shares (or 10%) from the year-ago period.

11

Segment Results

Federal Education Loans Segment

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

	Three Months Ended June 30,					% Increase (Decrease)			Six Months Ended  June 30,					% Increase (Decrease)
(Dollars in millions)	2025		2024			2025 vs. 2024			2025		2024			2025 vs. 2024
Interest income:
FFELP Loans	$	483	$	608			(21	)%	$	975	$	1,269			(23	)%
Cash and investments		10		28			(64	)		20		51			(61	)
Total interest income		493		636			(22	)		995		1,320			(25	)
Total interest expense		438		603			(27	)		892		1,233			(28	)
Net interest income		55		33			67			103		87			18
Less: provision for loan    losses		8		(2	)		500			16		(1	)		1,700
Net interest income after    provision for loan losses		47		35			34			87		88			(1	)
Total other income		10		17			(41	)		20		33			(39	)
Direct operating expenses		17		16			6			37		33			12
Income before income tax    expense		40		36			11			70		88			(20	)
Income tax expense		10		8			25			16		20			(20	)
Net income	$	30	$	28			7	%	$	54	$	68			(21	)%

Comparison of Second-Quarter 2025 Results with Second-Quarter 2024

•Net income was $30 million compared to $28 million.

•Net interest income increased $22 million primarily due to a decrease in premium amortization as a result of the significant decline in prepayments from $2.5 billion in the year-ago quarter to $228 million in the current quarter.

•Provision for loan losses increased $10 million. The $8 million of provision for loan losses in second-quarter 2025 was primarily the result of an increase in delinquency balances. The $(2) million of provision for loan losses in second-quarter 2024 was the result of relatively stable credit trends.

oNet charge-offs were $8 million compared to $10 million.

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

oForbearances were $3.7 billion compared to $5.3 billion.

•Other income decreased $7 million primarily as a result of lower late fees and third-party servicing fees.

•Expenses were $1 million higher primarily as a result of transitioning the servicing of our portfolio to a third party on July 1, 2024. As expected, for consolidated Navient (across the Federal Education Loans, Consumer Lending and Other segments), costs were neutral (net of transition services revenue earned) in the current quarter compared to costs we would have incurred if the servicing function remained in-house. Over the remaining life of the portfolio, we expect a significant overall cost savings to be realized.

12

Key performance metrics are as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
(Dollars in millions)	2025			2024			2025			2024
Segment net interest margin		.70	%		.36	%		.66	%		.46	%
FFELP Loans:
FFELP Loan spread		.75	%		.49	%		.71	%		.58	%
Provision for loan losses	$	8		$	(2	)	$	16		$	(1	)
Net charge-offs	$	8		$	10		$	14		$	20
Net charge-off rate		.14	%		.14	%		.12	%		.14	%
Greater than 30-days delinquency rate		19.0	%		13.5	%		19.0	%		13.5	%
Greater than 90-days delinquency rate		10.1	%		7.0	%		10.1	%		7.0	%
Forbearance rate		12.8	%		16.8	%		12.8	%		16.8	%
Average FFELP Loans	$	30,327		$	34,741		$	30,619		$	35,950
Ending FFELP Loans, net	$	29,618		$	32,940		$	29,618		$	32,940

Net Interest Margin

The following table details the net interest margin.

	Three Months Ended June 30,						Six Months Ended June 30,
	2025			2024			2025			2024
FFELP Loan yield		6.13	%		6.83	%		6.17	%		6.87	%
Floor Income		.25			.21			.25			.23
FFELP Loan net yield		6.38			7.04			6.42			7.10
FFELP Loan cost of funds		(5.63	)		(6.55	)		(5.71	)		(6.52	)
FFELP Loan spread		.75			.49			.71			.58
Other interest-earning asset spread impact		(.05	)		(.13	)		(.05	)		(.12	)
Net interest margin(1)		.70	%		.36	%		.66	%		.46	%

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

	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions)	2025		2024		2025		2024
FFELP Loans	$	30,327	$	34,741	$	30,619	$	35,950
Other interest-earning assets		861		2,192		875		2,026
Total FFELP Loan interest-earning assets	$	31,188	$	36,933	$	31,494	$	37,976

The 34 basis point increase in the net interest margin in second-quarter 2025 is primarily the result of premium amortization being $22 million higher in the year-ago period (25 basis points) due to prepayments being significantly higher at $2.5 billion in the year-ago period versus $228 million in the current period.

As of June 30, 2025, our FFELP Loan portfolio totaled $29.6 billion, comprised of $10.8 billion of FFELP Stafford Loans and $18.8 billion of FFELP Consolidation Loans. The weighted-average life of these portfolios as of June 30, 2025 was 8 years and 8 years, respectively, assuming a Constant Prepayment Rate (CPR) of 7% and 5%, respectively.

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Floor Income

The following table analyzes, on a Core Earnings basis, the ability of the FFELP Loans in our portfolio to earn Floor Income after June 30, 2025 and 2024, based on interest rates as of those dates.

(Dollars in billions)	June 30, 2025			June 30, 2024
Education loans eligible to earn Floor Income	$	29.4		$	32.7
Less: post-March 31, 2006 disbursed loans required to rebate    Floor Income		(14.2	)		(15.7	)
Less: economically hedged Floor Income		(.7	)		(1.8	)
Education loans eligible to earn Floor Income after rebates and    economically hedged	$	14.5		$	15.2
Education loans earning Floor Income	$	4.9		$	.9

The following table presents a projection of the average balance of FFELP Consolidation Loans for which Fixed Rate Floor Income has been economically hedged with derivatives for the period July 1, 2025 to December 31, 2028.

(Dollars in billions)	July 1, 2025 to December 31, 2025		2026		2027		2028
Average balance of FFELP Consolidation Loans    whose Floor Income is economically hedged	$	.7	$	.6	$	.3	$	.2

Provision for Loan Losses

Provision for loan losses increased $10 million. The $8 million of provision for loan losses in the current quarter was primarily the result of an increase in delinquency balances. The $(2) million of provision for loan losses in the year-ago quarter was the result of relatively stable credit trends.

Other Income

Other income decreased $7 million primarily as a result of lower late fees and third-party servicing fees.

Operating Expenses

Operating expenses for the Federal Education Loans segment primarily include costs incurred to perform servicing on our FFELP Loan portfolio and federal education loans held by other institutions. Expenses were $1 million higher primarily as a result of transitioning the servicing of our portfolio to a third party on July 1, 2024. As expected, for consolidated Navient (across the Federal Education Loan, Consumer Lending and Other segments), costs were neutral (net of transition services revenue earned) in second-quarter 2025 compared to costs we would have incurred if the servicing function remained in-house. Over the remaining life of the portfolio, we expect a significant overall cost savings to be realized. This increase in servicing expense was partially offset by the decline in the size of the portfolio.

14

Consumer Lending Segment

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

	Three Months Ended June 30,				% Increase (Decrease)			Six Months Ended June 30,				% Increase (Decrease)
(Dollars in millions)	2025		2024		2025 vs. 2024			2025		2024		2025 vs. 2024
Interest income:
Private Education Loans	$	273	$	317		(14	)%	$	562	$	645		(13	)%
Cash and investments		5		7		(29	)		10		14		(29	)
Interest income		278		324		(14	)		572		659		(13	)
Interest expense		183		198		(8	)		364		400		(9	)
Net interest income		95		126		(25	)		208		259		(20	)
Less: provision for loan    losses		29		16		81			51		27		89
Net interest income after    provision for loan losses		66		110		(40	)		157		232		(32	)
Total other income		3		3		—			6		8		(25	)
Direct operating expenses		36		34		6			70		67		4
Income before income tax    expense		33		79		(58	)		93		173		(46	)
Income tax expense		7		19		(63	)		21		40		(48	)
Net income	$	26	$	60		(57	)%	$	72	$	133		(46	)%

Comparison of Second-Quarter 2025 Results with Second-Quarter 2024

•Originated $500 million of Private Education Loans compared to $278 million.

oRefinance Loan originations were $443 million compared to $222 million.

oIn-school loan originations were $57 million compared to $56 million.

•Net income was $26 million compared to $60 million.

•Net interest income decreased $31 million, of which $20 million was due to the paydown of the loan portfolio and $11 million was due to reserving for the increase in accrued interest receivable on loans greater than 90-days delinquent.

•Provision for loan losses increased $13 million. The provision for loan losses of $29 million in the current period included $7 million in connection with loan originations and $22 million related to a general reserve build (primarily as a result of an increase in delinquency balances as well as a weakening in the forecasted macroeconomic metrics used to estimate expected losses). The provision for loan losses of $16 million in the year-ago period included $6 million in connection with loan originations and $10 million related to a general reserve build.

oExcluding $1 million related to the change in the net charge-off rate on defaulted loans in second-quarter 2025, net charge-offs were $79 million, up $12 million from $67 million.

oPrivate Education Loan delinquencies greater than 90 days: $459 million, up $108 million from $351 million.

oPrivate Education Loan forbearances: $250 million, down $44 million from $294 million.

•Expenses increased $2 million primarily as a result of higher marketing spend associated with higher loan origination volume.

15

Key performance metrics are as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
(Dollars in millions)	2025			2024			2025			2024
Segment net interest margin		2.32	%		2.89	%		2.54	%		2.94	%
Private Education Loans (including Refinance Loans):
Private Education Loan spread		2.42	%		3.01	%		2.64	%		3.06	%
Provision for loan losses	$	29		$	16		$	51		$	27
Net charge-offs(1)	$	79		$	67		$	150		$	166
Net charge-off rate(1)		2.06	%		1.65	%		1.96	%		2.03	%
Greater than 30-days delinquency rate		6.4	%		5.2	%		6.4	%		5.2	%
Greater than 90-days delinquency rate		3.0	%		2.2	%		3.0	%		2.2	%
Forbearance rate		1.6	%		1.8	%		1.6	%		1.8	%
Average Private Education Loans	$	15,992		$	16,936		$	16,075		$	17,160
Ending Private Education Loans, net	$	15,530		$	16,238		$	15,530		$	16,238
Private Education Refinance Loans:
Net charge-offs	$	18		$	12		$	33		$	24
Greater than 90-days delinquency rate		.8	%		.5	%		.8	%		.5	%
Average balance of Private Education Refinance Loans	$	8,531		$	8,662		$	8,497		$	8,729
Ending balance of Private Education Refinance Loans	$	8,469		$	8,494		$	8,469		$	8,494
Private Education Refinance Loan originations	$	443		$	222		$	914		$	450

(1)Excludes $1 million and $2 million of charge-offs on the expected future recoveries of previously fully charged-off loans in the three and six months ended June 30, 2025, respectively, as a result of increasing the net charge-off rate on defaulted loans.

Net Interest Margin

The following table details the net interest margin.

	Three Months Ended June 30,						Six Months Ended June 30,
	2025			2024			2025			2024
Private Education Loan yield		6.85	%		7.53	%		7.05	%		7.56	%
Private Education Loan cost of funds		(4.43	)		(4.52	)		(4.41	)		(4.50	)
Private Education Loan spread		2.42			3.01			2.64			3.06
Other interest-earning asset spread impact		(.10	)		(.12	)		(.10	)		(.12	)
Net interest margin(1)		2.32	%		2.89	%		2.54	%		2.94	%

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

	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions)	2025		2024		2025		2024
Private Education Loans	$	15,992	$	16,936	$	16,075	$	17,160
Other interest-earning assets		482		572		485		558
Total Private Education Loan interest-earning assets	$	16,474	$	17,508	$	16,560	$	17,718

The 57 basis point decrease in the net interest margin in second-quarter 2025 is primarily the result of an $11 million increase (30 basis points) in reserving in connection with the increase in accrued interest receivable on loans greater than 90-days delinquent. In addition, the continued shift of the Refinance Loan portfolio becoming a higher percentage of the overall Private Education Loan portfolio and the Refinance Loan portfolio earning a lower net interest margin compared to the legacy portfolio reduces the overall net interest margin.

As of June 30, 2025, our Private Education Loan portfolio totaled $15.5 billion, comprised of $8.5 billion of refinance loans and $7.0 billion of non-refinance loans. The weighted-average life of these portfolios as of June 30, 2025 was 5 years and 5 years, respectively, assuming a CPR of 10% and 10%, respectively.

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Provision for Loan Losses

The provision for Private Education Loan losses increased $13 million. The provision for loan losses of $29 million in second quarter 2025 included $7 million in connection with loan originations and $22 million related to a general reserve build (primarily as a result of an increase in delinquency balances as well as a weakening in the forecasted macroeconomic metrics used to estimate expected losses). The provision for loan losses of $16 million in the year-ago period included $6 million in connection with loan originations and $10 million related to a general reserve build.

Operating Expenses

Operating expenses for our consumer lending segment include costs to originate, acquire, service and collect on our consumer loan portfolio. Operating expenses increased $2 million primarily as a result of higher marketing spend associated with higher loan origination volume.

Business Processing Segment

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

	Three Months Ended June 30,				% Increase (Decrease)			Six Months Ended June 30,				% Increase (Decrease)
(Dollars in millions)	2025		2024		2025 vs. 2024			2025		2024		2025 vs. 2024
Business processing revenue	$	—	$	81		(100	)%	$	23	$	158		(85	)%
Direct operating expenses		—		62		(100	)		20		131		(85	)
Income before income tax    expense		—		19		(100	)		3		27		(89	)
Income tax expense		—		4		(100	)		1		6		(83	)
Net income	$	—	$	15		(100	)%	$	2	$	21		(90	)%

Comparison of Second-Quarter 2025 Results with Second-Quarter 2024

•With the sale of our government services business in February 2025, Navient no longer provides business processing segment services. Navient is providing certain transition services (reflected in the Other segment) in connection with the sale of our business processing businesses. The transition services in connection with the sale of our healthcare business ended May 2025 and we expect the transition services in connection with the sale of our government services business to be mostly completed by the end of 2025.

Key performance metrics are as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
(Dollars in millions)	2025			2024			2025			2024
Revenue from government services	$	—		$	49		$	23		$	97
Revenue from healthcare services		—			32			—			61
Total fee revenue	$	—		$	81		$	23		$	158
EBITDA(1)	$	—		$	20		$	3		$	29
EBITDA margin(1)		—	%		25	%		13	%		18	%

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

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Other Segment

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

	Three Months Ended June 30,						% Increase (Decrease)			Six Months Ended June 30,						% Increase (Decrease)
(Dollars in millions)	2025			2024			2025 vs. 2024			2025			2024			2025 vs. 2024
Net interest loss after provision for    loan losses	$	(19	)	$	(23	)		(17	)%	$	(36	)	$	(47	)		(23	)%
Other revenue (loss)		20			2			900			34			7			386
Expenses:
Unallocated shared services    operating expenses:
Unallocated information       technology costs		20			20			—			41			42			(2	)
Unallocated corporate costs		27			34			(21	)		59			77			(23	)
Total unallocated shared    services operating    expenses		47			54			(13	)		100			119			(16	)
Restructuring/other    reorganization expenses		—			16			(100	)		3			17			(82	)
Total expenses		47			70			(33	)		103			136			(24	)
Loss before income tax benefit		(46	)		(91	)		(49	)		(105	)		(176	)		(40	)
Income tax benefit		(11	)		(21	)		(48	)		(24	)		(40	)		(40	)
Net income (loss)	$	(35	)	$	(70	)		(50	)%	$	(81	)	$	(136	)		(40	)%

Net Interest Loss after Provision for Loan Losses

Net interest loss after provision for loan losses is due to the negative carrying cost of our corporate liquidity portfolio. The amount of the net interest loss is primarily a result of the size of the liquidity portfolio as well as the cost of funds of the debt funding the corporate liquidity portfolio.

Other Revenue (Loss)

All revenue and expense in connection with the transition services we are performing related to the outsourcing of servicing and divestiture of our Business Processing segment are included in the Other segment. The increase from the year-ago quarter relates to these services.

Unallocated Shared Services Operating Expenses

Unallocated shared services operating expenses are costs primarily related to information technology costs related to infrastructure and operations, stock-based compensation expense, accounting, finance, legal, compliance and risk management, regulatory-related expenses, human resources, certain executive management, the Board of Directors, and transition services discussed above under "Other Revenue." Regulatory-related expenses include actual settlement amounts as well as third-party professional fees we incur in connection with such regulatory matters and are presented net of any insurance reimbursements for covered costs related to such matters. Expenses decreased $7 million from second-quarter 2024, primarily as a result of an $11 million decrease in regulatory-related expenses. Regulatory-related expenses were $1 million and $12 million in second quarters 2025 and 2024, respectively, with second-quarter 2024 including a contingency loss accrual of $20 million related to the $120 million settlement agreement entered into with the CFPB in September 2024. There was also a decrease in expenses related to cost reduction efforts in connection with the various strategic initiatives being implemented to simplify the Company, reduce our expense base and enhance our flexibility, which was mostly offset by $13 million of costs incurred providing temporary transition services in connection with the various strategic initiatives.

See “Note 10 – Commitments, Contingencies and Guarantees” for a discussion of legal and regulatory matters where it is reasonably possible that a loss contingency exists. The Company is unable to anticipate the timing of a resolution or the impact that certain matters may have on the Company’s consolidated financial position, liquidity, results of operation or cash flows. As a result, it is not possible at this time to estimate a range of potential exposure, if any, for amounts that may be payable in connection with certain matters and reserves have not been established. It is possible that an adverse ruling or rulings may have a material adverse impact on the Company.

Restructuring/Other Reorganization Expenses

These expenses decreased $16 million primarily due to a decrease in severance-related costs in connection with the various strategic initiatives being implemented to simplify the Company, reduce our expense base and enhance our flexibility.

18

Financial Condition

This section provides information regarding the balances, activity and credit performance metrics of our education loan portfolio.

Summary of Our Education Loan Portfolio

Ending Education Loan Balances, net

	June 30, 2025
(Dollars in millions)	FFELP Stafford and Other			FFELP Consolidation Loans			Total FFELP Loans			Private Education Loans			Total Portfolio
Total education loan portfolio:
In-school(1)	$	8		$	—		$	8		$	88		$	96
Grace, repayment and other(2)		10,933			18,859			29,792			15,790			45,582
Total		10,941			18,859			29,800			15,878			45,678
Allowance for loan losses		(144	)		(38	)		(182	)		(348	)		(530	)
Total education loan portfolio	$	10,797		$	18,821		$	29,618		$	15,530		$	45,148
% of total FFELP		36	%		64	%		100	%
% of total		24	%		42	%		66	%		34	%		100	%

	December 31, 2024
(Dollars in millions)	FFELP Stafford and Other			FFELP Consolidation Loans			Total FFELP Loans			Private Education Loans			Total Portfolio
Total education loan portfolio:
In-school(1)	$	9		$	—		$	9		$	95		$	104
Grace, repayment and other(2)		11,233			19,790			31,023			16,062			47,085
Total		11,242			19,790			31,032			16,157			47,189
Allowance for loan losses		(139	)		(41	)		(180	)		(441	)		(621	)
Total education loan portfolio	$	11,103		$	19,749		$	30,852		$	15,716		$	46,568
% of total FFELP		36	%		64	%		100	%
% of total		24	%		42	%		66	%		34	%		100	%

	June 30, 2024
(Dollars in millions)	FFELP Stafford and Other			FFELP Consolidation Loans			Total FFELP Loans			Private Education Loans			Total Portfolio
Total education loan portfolio:
In-school(1)	$	11		$	—		$	11		$	70		$	81
Grace, repayment and other(2)		11,931			21,192			33,123			16,661			49,784
Total		11,942			21,192			33,134			16,731			49,865
Allowance for loan losses		(146	)		(48	)		(194	)		(493	)		(687	)
Total education loan portfolio	$	11,796		$	21,144		$	32,940		$	16,238		$	49,178
% of total FFELP		36	%		64	%		100	%
% of total		24	%		43	%		67	%		33	%		100	%

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

(2)Includes loans in deferment or forbearance.

19

Education Loan Activity

	Three Months Ended June 30, 2025
(Dollars in millions)	FFELP Stafford and Other			FFELP Consolidation Loans			Total FFELP Loans			Private Education Loans			Total Portfolio
Beginning balance	$	10,975		$	19,269		$	30,244		$	15,690		$	45,934
Acquisitions (originations and purchases)(1)		—			—			—			472			472
Capitalized interest and premium/discount    amortization		130			129			259			42			301
Refinancings and consolidations to third    parties		(103	)		(119	)		(222	)		(54	)		(276	)
Repayments and other		(205	)		(458	)		(663	)		(620	)		(1,283	)
Ending balance	$	10,797		$	18,821		$	29,618		$	15,530		$	45,148

	Three Months Ended June 30, 2024
(Dollars in millions)	FFELP Stafford and Other			FFELP Consolidation Loans			Total FFELP Loans			Private Education Loans			Total Portfolio
Beginning balance	$	12,677		$	23,202		$	35,879		$	16,608		$	52,487
Acquisitions (originations and purchases)(1)		—			—			—			247			247
Capitalized interest and premium/discount    amortization		120			127			247			47			294
Refinancings and consolidations to third    parties		(749	)		(1,636	)		(2,385	)		(49	)		(2,434	)
Repayments and other		(252	)		(549	)		(801	)		(615	)		(1,416	)
Ending balance	$	11,796		$	21,144		$	32,940		$	16,238		$	49,178

	Six Months Ended June 30, 2025
(Dollars in millions)	FFELP Stafford and Other			FFELP Consolidation Loans			Total FFELP Loans			Private Education Loans			Total Portfolio
Beginning balance	$	11,103		$	19,749		$	30,852		$	15,716		$	46,568
Acquisitions (originations and purchases)(1)		—			—			—			1,103			1,103
Capitalized interest and premium/discount    amortization		267			252			519			91			610
Refinancings and consolidations to third    parties		(186	)		(238	)		(424	)		(109	)		(533	)
Repayments and other		(387	)		(942	)		(1,329	)		(1,271	)		(2,600	)
Ending balance	$	10,797		$	18,821		$	29,618		$	15,530		$	45,148

	Six Months Ended June 30, 2024
(Dollars in millions)	FFELP Stafford and Other			FFELP Consolidation Loans			Total FFELP Loans			Private Education Loans			Total Portfolio
Beginning balance	$	13,564		$	24,361		$	37,925		$	16,902		$	54,827
Acquisitions (originations and purchases)(1)		—			—			—			610			610
Capitalized interest and premium/discount    amortization		254			267			521			106			627
Refinancings and consolidations to third    parties		(1,231	)		(2,424	)		(3,655	)		(99	)		(3,754	)
Repayments and other		(791	)		(1,060	)		(1,851	)		(1,281	)		(3,132	)
Ending balance	$	11,796		$	21,144		$	32,940		$	16,238		$	49,178

(1)Includes the origination of $73 million and $44 million of Private Education Refinance Loans in the second-quarters of 2025 and 2024, respectively, and $146 million and $91 million in the six months ended June 30, 2025 and 2024, respectively, that refinanced FFELP and Private Education Loans that were on our balance sheet

20

FFELP Loan Portfolio Performance

	June 30, 2025						December 31, 2024						June 30, 2024
(Dollars in millions)	Balance			%			Balance			%			Balance			%
Loans in-school/grace/deferment(1)	$	1,280					$	1,262					$	1,403
Loans in forbearance(2)		3,653						4,365						5,320
Loans in repayment and percentage of each status:
Loans current		20,145			81.0	%		20,675			81.4	%		22,833			86.5	%
Loans delinquent 31-60 days(3)		1,333			5.4			1,479			5.8			1,041			3.9
Loans delinquent 61-90 days(3)		863			3.5			1,043			4.1			680			2.6
Loans delinquent greater than 90 days(3)		2,526			10.1			2,208			8.7			1,857			7.0
Total FFELP Loans in repayment		24,867			100	%		25,405			100	%		26,411			100	%
Total FFELP Loans		29,800						31,032						33,134
FFELP Loan allowance for losses		(182	)					(180	)					(194	)
FFELP Loans, net	$	29,618					$	30,852					$	32,940
Percentage of FFELP Loans in repayment					83.4	%					81.9	%					79.7	%
Delinquencies as a percentage of FFELP Loans in    repayment					19.0	%					18.6	%					13.5	%
FFELP Loans in forbearance as a percentage of    loans in repayment and forbearance					12.8	%					14.7	%					16.8	%

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

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

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

Private Education Loan Portfolio Performance

	June 30, 2025						December 31, 2024						June 30, 2024
(Dollars in millions)	Balance			%			Balance			%			Balance			%
Loans in-school/grace/deferment(1)	$	361					$	372					$	350
Loans in forbearance(2)		250						422						294
Loans in repayment and percentage of each status:
Loans current		14,296			93.6	%		14,419			93.9	%		15,250			94.8	%
Loans delinquent 31-60 days(3)		335			2.2			319			2.1			311			1.9
Loans delinquent 61-90 days(3)		177			1.2			206			1.3			175			1.1
Loans delinquent greater than 90 days(3)		459			3.0			419			2.7			351			2.2
Total Private Education Loans in repayment		15,267			100	%		15,363			100	%		16,087			100	%
Total Private Education Loans		15,878						16,157						16,731
Private Education Loan allowance for losses		(348	)					(441	)					(493	)
Private Education Loans, net	$	15,530					$	15,716					$	16,238
Percentage of Private Education Loans in    repayment					96.2	%					95.1	%					96.2	%
Delinquencies as a percentage of Private Education    Loans in repayment					6.4	%					6.1	%					5.2	%
Loans in forbearance as a percentage of loans in    repayment and forbearance					1.6	%					2.7	%					1.8	%
Percentage of Private Education Loans with a    cosigner(4)					32	%					32	%					32	%

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

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

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

(4)Excluding Private Education Refinance Loans, which do not have a cosigner, the cosigner rate was 66% for all periods presented.

21

Allowance for Loan Losses

	Three Months Ended June 30,
	2025									2024
(Dollars in millions)	FFELP Loans			Private Education Loans			Total			FFELP Loans			Private Education Loans			Total
Allowance at beginning of period	$	182		$	397		$	579		$	206		$	538		$	744
Total provision		8			29			37			(2	)		16			14
Charge-offs:
Gross charge-offs		(8	)		(92	)		(100	)		(10	)		(77	)		(87	)
Expected future recoveries on current period gross      charge-offs		—			13			13			—			10			10
Total(1)		(8	)		(79	)		(87	)		(10	)		(67	)		(77	)
Adjustment resulting from the change in charge-off      rate(2)		—			(1	)		(1	)		—			—			—
Net charge-offs		(8	)		(80	)		(88	)		(10	)		(67	)		(77	)
Decrease in expected future recoveries on previously    fully charged-off loans(3)		—			2			2			—			6			6
Allowance at end of period (GAAP)		182			348			530			194			493			687
Plus: expected future recoveries on previously fully    charged-off loans(3)		—			172			172			—			211			211
Allowance at end of period excluding expected future    recoveries on previously fully charged-off loans    (Non-GAAP Financial Measure)(4)	$	182		$	520		$	702		$	194		$	704		$	898
Net charge-offs as a percentage of average loans in    repayment, excluding the net adjustment resulting    from the change in charge-off rate (annualized)(2)		.14	%		2.06	%					.14	%		1.65	%
Net adjustment resulting from the change in charge    -off rate as a percentage of average loans in    repayment (annualized)(2)		—	%		.02	%					—	%		—	%
Net charge-offs as a percentage of average loans    in repayment (annualized)		.14	%		2.08	%					.14	%		1.65	%
Allowance coverage of charge-offs (annualized)(4)		5.2			1.6		(Non-GAAP)				5.0			2.6		(Non-GAAP)
Allowance as a percentage of the ending total loan    balance(4)		.6	%		3.3	%	(Non-GAAP)				.6	%		4.2	%	(Non-GAAP)
Allowance as a percentage of the ending loans in    repayment(4)		.7	%		3.4	%	(Non-GAAP)				.7	%		4.4	%	(Non-GAAP)
Ending total loans	$	29,800		$	15,878					$	33,134		$	16,731
Average loans in repayment	$	25,133		$	15,375					$	27,509		$	16,271
Ending loans in repayment	$	24,867		$	15,267					$	26,411		$	16,087

(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)Related to increasing the net charge-off rate on defaulted Private Education Loans and the resulting reduction in the balance of expected future recoveries on previously fully charged-off loans.

(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 June 30,
(Dollars in millions)	2025			2024
Beginning of period expected future recoveries on    previously fully charged-off loans	$	174		$	217
Expected future recoveries of current period defaults		13			10
Recoveries (cash collected)		(11	)		(10	)
Charge-offs (as a result of lower recovery expectations)		(4	)		(6	)
End of period expected future recoveries on previously    fully charged-off loans	$	172		$	211
Change in balance during period	$	(2	)	$	(6	)

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

22

	Six Months Ended June 30,
	2025									2024
(Dollars in millions)	FFELP Loans			Private Education Loans			Total			FFELP Loans			Private Education Loans			Total
Beginning balance	$	180		$	441		$	621		$	215		$	617		$	832
Total provision		16			51			67			(1	)		27			26
Charge-offs:
Gross charge-offs		(14	)		(173	)		(187	)		(20	)		(187	)		(207	)
Expected future recoveries on current period gross    charge-offs		—			23			23			—			21			21
Total(1)		(14	)		(150	)		(164	)		(20	)		(166	)		(186	)
Adjustment resulting from the change in charge-off    rate(2)		—			(2	)		(2	)		—			—			—
Net charge-offs		(14	)		(152	)		(166	)		(20	)		(166	)		(186	)
Decrease in expected future recoveries on previously    fully charged-off loans(3)		—			8			8			—			15			15
Allowance at end of period (GAAP)		182			348			530			194			493			687
Plus: expected future recoveries on previously fully    charged-off loans(3)		—			172			172			—			211			211
Allowance at end of period excluding expected future    recoveries on previously fully charged-off loans    (Non-GAAP Financial Measure)(4)	$	182		$	520		$	702		$	194		$	704		$	898
Net charge-offs as a percentage of average loans in    repayment, excluding the net adjustment resulting    from the change in the charge-off rate    (annualized)(2)		.12	%		1.96	%					.14	%		2.03	%
Net adjustment resulting from the change in charge    -off rate as a percentage of average loans in    repayment (annualized)(2)		—	%		.02	%					—	%		—	%
Net charge-offs as a percentage of average loans in    repayment (annualized)		.12	%		1.98	%					.14	%		2.03	%
Allowance coverage of charge-offs    (annualized)(4)		6.1			1.7		(Non-GAAP)				4.9			2.1		(Non-GAAP)
Allowance as a percentage of the ending total loan    balance(4)		.6	%		3.3	%	(Non-GAAP)				.6	%		4.2	%	(Non-GAAP)
Allowance as a percentage of the ending loans in    repayment(4)		.7	%		3.4	%	(Non-GAAP)				.7	%		4.4	%	(Non-GAAP)
Ending total loans	$	29,800		$	15,878					$	33,134		$	16,731
Average loans in repayment	$	25,295		$	15,423					$	28,622		$	16,471
Ending loans in repayment	$	24,867		$	15,267					$	26,411		$	16,087

(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)Related to increasing the net charge-off rate on defaulted Private Education Loans and the resulting reduction in the balance of expected future recoveries on previously fully charged-off loans.

(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

	Six Months Ended June 30,
(Dollars in millions)	2025			2024
Beginning of period expected future recoveries on    previously fully charged-off loans	$	179		$	226
Expected future recoveries of current period defaults		23			21
Recoveries (cash collected)		(21	)		(21	)
Charge-offs (as a result of lower recovery expectations)		(10	)		(15	)
End of period expected future recoveries on previously    fully charged-off loans	$	172		$	211
Change in balance during period	$	(8	)	$	(15	)

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

23

Liquidity and Capital Resources

Funding and Liquidity Risk Management

The following “Liquidity and Capital Resources” discussion concentrates primarily on our Federal Education Loans and Consumer Lending segments. Our Business Processing segment required minimal liquidity and funding.

We define liquidity as cash and high-quality liquid assets that we can use to meet our cash requirements. Our two primary liquidity needs are: (1) servicing our debt and (2) our ongoing ability to meet our cash needs for running the operations of our businesses (including derivative collateral requirements) throughout market cycles, including during periods of financial stress. Secondary liquidity needs, which can be adjusted as needed, include the origination of Private Education Loans, acquisitions of Private Education Loan portfolios, acquisitions of companies, the payment of common stock dividends and the repurchase of our common stock. To achieve these objectives, we analyze and monitor our liquidity needs and maintain excess liquidity and access to diverse funding sources including the issuance of unsecured debt and the issuance of secured debt primarily through asset-backed securitizations and/or other financing facilities.

We define our liquidity risk as the potential inability to meet our obligations when they become due without incurring unacceptable losses or to invest in future asset growth and business operations at reasonable market rates. Our primary liquidity risk relates to our ability to service our debt, meet our other business obligations and to continue to grow our business. The ability to access the capital markets is impacted by general market and economic conditions, our credit ratings, as well as the overall availability of funding sources in the marketplace. In addition, credit ratings may be important to customers or counterparties when we compete in certain markets and when we seek to engage in certain transactions.

Credit ratings and outlooks are opinions subject to ongoing review by the rating agencies and may change, from time to time, based on our financial performance, industry and market dynamics and other factors. Other factors that influence our credit ratings include the rating agencies’ assessment of the general operating environment, our relative positions in the markets in which we compete, reputation, liquidity position, the level and volatility of earnings, corporate governance and risk management policies, capital position and capital management practices. A negative change in our credit rating could have a negative effect on our liquidity because it might raise the cost and availability of funding and potentially require additional cash collateral or restrict cash currently held as collateral on existing borrowings or derivative collateral arrangements. It is our objective to improve our credit ratings so that we can continue to efficiently access the capital markets even in difficult economic and market conditions. We have unsecured debt totaling $5.3 billion at June 30, 2025. Three credit rating agencies currently rate our long-term unsecured debt at below investment grade.

We expect to fund our ongoing liquidity needs, including the repayment of $0.5 billion of senior unsecured notes that mature in the short term (i.e., over the next 12 months) and the remaining $4.8 billion of senior unsecured notes that mature in the long term (from 2026 to 2043 with 69% maturing by 2031), through a number of sources. These sources include our cash on hand, unencumbered FFELP Loan and Private Education Refinance Loan portfolios (see “Sources of Primary Liquidity” below), the predictable operating cash flows provided by operating activities, the repayment of principal on unencumbered education loan assets, and the distribution of overcollateralization from our securitization trusts. We may also, depending on market conditions and availability, draw down on our secured FFELP Loan and Private Education Loan asset-backed commercial paper (ABCP) facilities, issue term ABS, enter into additional Private Education Loan and FFELP Loan ABS repurchase facilities, or issue additional unsecured debt.

We originate Private Education Loans (a portion of which is obtained through a forward purchase agreement). We also have purchased and may purchase, in future periods, Private Education Loan portfolios from third parties. Those originations and purchases are part of our ongoing liquidity needs. We purchased 1.9 million shares of common stock for $24 million in the first quarter of 2025 and have $52 million of unused share repurchase authority as of June 30, 2025.

24

Sources of Primary Liquidity

(Dollars in millions)	June 30, 2025		December 31, 2024		June 30, 2024
Ending Balances:
Unrestricted cash	$	712	$	722	$	1,088
Unencumbered FFELP Loans		51		232		160
Unencumbered Private Education    Refinance Loans		510		242		326
Total	$	1,273	$	1,196	$	1,574

	Three Months Ended						Six Months Ended
(Dollars in millions)	June 30, 2025		December 31, 2024		June 30, 2024		June 30, 2025		June 30, 2024
Average Balances:
Unrestricted cash	$	743	$	737	$	1,116	$	658	$	941
Unencumbered FFELP    Loans		73		316		148		123		132
Unencumbered Private    Education Refinance    Loans		629		433		224		517		221
Total	$	1,445	$	1,486	$	1,488	$	1,298	$	1,294

Sources of Additional Liquidity

Liquidity may also be available under our secured credit facilities. Maximum borrowing capacity under the FFELP Loan and Private Education Loan ABCP facilities will vary and be subject to each agreement’s borrowing conditions, including, among others, facility size, current usage and availability of qualifying collateral from unencumbered loans. The following tables detail the additional borrowing capacity of these facilities with maturity dates ranging from October 2025 to April 2027.

(Dollars in millions)	June 30, 2025		December 31, 2024		June 30, 2024
Ending Balances:
FFELP Loan ABCP facilities	$	190	$	424	$	416
Private Education Loan ABCP facilities		1,754		1,490		2,088
Total	$	1,944	$	1,914	$	2,504

	Three Months Ended						Six Months Ended
(Dollars in millions)	June 30, 2025		December 31, 2024		June 30, 2024		June 30, 2025		June 30, 2024
Average Balances:
FFELP Loan ABCP facilities	$	219	$	423	$	409	$	284	$	409
Private Education Loan ABCP    facilities		1,613		1,799		1,664		1,530		1,613
Total	$	1,832	$	2,222	$	2,073	$	1,814	$	2,022

At June 30, 2025, we had a total of $2.9 billion of unencumbered tangible assets inclusive of those listed in the table above as sources of primary liquidity. Total unencumbered education loans comprised $1.3 billion of our unencumbered tangible assets of which $1.3 billion and $51 million related to Private Education Loans and FFELP Loans, respectively. In addition, as of June 30, 2025, we had $4.8 billion of encumbered net assets (i.e., overcollateralization) in our various financing facilities (consolidated variable interest entities). We enter into repurchase facilities at times to borrow against the encumbered net assets of these financing vehicles. As of June 30, 2025, $0.7 billion of repurchase facility borrowings were outstanding.

25

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

(Dollars in billions)	June 30, 2025			December 31, 2024
Net assets of consolidated variable interest    entities (encumbered assets) — FFELP Loans	$	2.8		$	2.8
Net assets of consolidated variable interest entities    (encumbered assets) — Private Education Loans		2.0			2.0
Tangible unencumbered assets(1)		2.9			2.9
Senior unsecured debt		(5.3	)		(5.4	)
Mark-to-market on unsecured hedged debt(2)		—			.2
Other liabilities, net		(.3	)		(.3	)
Total Tangible Equity (3)	$	2.1		$	2.2

(1)Excludes goodwill and acquired intangible assets.

(2)At June 30, 2025 and December 31, 2024, there were $(72) million and $(181) million, respectively, of net gains (losses) on derivatives hedging this debt in unencumbered assets, which partially offset these gains (losses).

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

Borrowings

Ending Balances

	June 30, 2025									December 31, 2024
(Dollars in millions)	Short Term			Long Term			Total			Short Term			Long Term			Total
Unsecured borrowings:
Senior unsecured debt	$	505		$	4,798		$	5,303		$	553		$	4,806		$	5,359
Total unsecured borrowings		505			4,798			5,303			553			4,806			5,359
Secured borrowings:
FFELP Loan securitizations		117			26,948			27,065			41			28,268			28,309
Private Education Loan securitizations		562			10,322			10,884			631			10,338			10,969
FFELP Loan ABCP facilities		1,531			301			1,832			1,586			74			1,660
Private Education Loan ABCP facilities		1,943			—			1,943			2,274			—			2,274
Other		97			39			136			54			40			94
Total secured borrowings		4,250			37,610			41,860			4,586			38,720			43,306
Core Earnings basis borrowings(1)		4,755			42,408			47,163			5,139			43,526			48,665
Adjustment for GAAP accounting treatment		(3	)		(63	)		(66	)		(5	)		(342	)		(347	)
GAAP basis borrowings	$	4,752		$	42,345		$	47,097		$	5,134		$	43,184		$	48,318

Average Balances

	Three Months Ended June 30,										Six Months Ended June 30,
	2025					2024					2025					2024
(Dollars in millions)	Average Balance		Average Rate			Average Balance		Average Rate			Average Balance		Average Rate			Average Balance		Average Rate
Unsecured borrowings:
Senior unsecured debt	$	5,512		8.48	%	$	5,859		9.26	%	$	5,419		8.50	%	$	5,858		9.25	%
Total unsecured borrowings		5,512		8.48			5,859		9.26			5,419		8.50			5,858		9.25
Secured borrowings:
FFELP Loan securitizations		27,372		5.46			32,938		6.42			27,691		5.55			33,899		6.38
Private Education Loan    securitizations		10,690		3.68			11,777		3.67			10,714		3.65			11,842		3.61
FFELP Loan ABCP facilities		1,820		5.76			1,761		6.94			1,772		5.82			1,827		6.96
Private Education Loan    ABCP facilities		2,105		6.34			2,156		7.36			2,204		6.33			2,199		7.31
Other		105		1.57			96		(3.45	)		98		.91			104		(2.50	)
Total secured borrowings		42,092		5.06			48,728		5.79			42,479		5.11			49,871		5.77
Core Earnings basis    borrowings(1)		47,604		5.45			54,587		6.17			47,898		5.50			55,729		6.14
Adjustment for GAAP    accounting treatment		—		.03			—		.04			—		.07			—		.06
GAAP basis borrowings	$	47,604		5.48	%	$	54,587		6.21	%	$	47,898		5.57	%	$	55,729		6.20	%

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

26

Critical Accounting Policies and Estimates

Management’s Discussion and Analysis of Financial Condition and Results of Operations addresses our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP). A discussion of our critical accounting policies, which includes the allowance for loan losses, goodwill impairment assessment, premium and discount amortization, and the impact of the SDR Plan on our accounting policies and estimates, can be found in our 2024 Form 10-K.

Non-GAAP Financial Measures

In addition to financial results reported on a GAAP basis, Navient also provides certain performance measures which are non-GAAP financial measures. We present the following non-GAAP financial measures: (1) Core Earnings, (2) Tangible Equity (as well as the Adjusted Tangible Equity Ratio), (3) EBITDA for the Business Processing segment, and (4) Allowance for Loan Losses Excluding Expected Future Recoveries on Previously Fully Charged-off Loans. Definitions for the non-GAAP financial measures and reconciliations are provided below, except that reconciliations of forward-looking non-GAAP financial measures are not provided because the Company is unable to provide such reconciliations without unreasonable effort due to the uncertainty and inherent difficulty of predicting the occurrence and financial impact of certain items, including, but not limited to, the impact of any mark-to-market gains/losses resulting from our use of derivative instruments to hedge our economic risks.

1. Core Earnings

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

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

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

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

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

27

The following tables show our consolidated GAAP results, Core Earnings results (including for each reportable segment) along with the adjustments made to the income/expense items to reconcile the consolidated GAAP results to the Core Earnings results as required by GAAP and reported in “Note 11 — Segment Reporting.”

	Three Months Ended June 30, 2025
			Adjustments											Reportable Segments
(Dollars in millions)	Total GAAP		Reclassi- fications			Additions/ (Subtractions)			Total Adjustments (1)			Total Core Earnings		Federal Education Loans			Consumer Lending		Business Processing		Other
Interest income:
Education loans	$	756												$	483		$	273	$	—	$	—
Cash and investments		22													10			5		—		7
Total interest income		778													493			278		—		7
Total interest expense		650													438			183		—		26
Net interest income    (loss)		128	$	5		$	(2	)	$	3		$	131		55			95		—		(19	)
Less: provisions for loan    losses		37											37		8			29		—		—
Net interest income    (loss) after provisions    for loan losses		91													47			66		—		(19	)
Other income (loss):
Servicing revenue		14													11			3		—		—
Asset recovery and    business processing    revenue		—													—			—		—		—
Other revenue (loss)		14													(1	)		—		—		20
Total other income		28		(5	)		10			5			33		10			3		—		20
Expenses:
Direct operating    expenses		53													17			36		—		—
Unallocated shared    services expenses		47													—			—		—		47
Operating expenses		100		—			—			—			100		17			36		—		47
Goodwill and acquired    intangible asset    impairment and    amortization		1		—			(1	)		(1	)		—		—			—		—		—
Restructuring/other    reorganization    expenses		—		—			—			—			—		—			—		—		—
Total expenses		101		—			(1	)		(1	)		100		17			36		—		47
Income (loss) before    income tax expense    (benefit)		18		—			9			9			27		40			33		—		(46	)
Income tax expense    (benefit)(2)		4		—			2			2			6		10			7		—		(11	)
Net income (loss)	$	14	$	—		$	7		$	7		$	21	$	30		$	26	$	—	$	(35	)

(1)Core Earnings adjustments to GAAP:

	Three Months Ended June 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	$	3	$	—		$	3
Total other income (loss)		5		—			5
Goodwill and acquired intangible asset impairment and amortization		—		(1	)		(1	)
Total Core Earnings adjustments to GAAP	$	8	$	1			9
Income tax expense (benefit)							2
Net income (loss)						$	7

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

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	Three Months Ended June 30, 2024
			Adjustments											Reportable Segments
(Dollars in millions)	Total GAAP		Reclassi- fications			Additions/ (Subtractions)			Total Adjustments (1)			Total Core Earnings		Federal Education Loans			Consumer Lending		Business Processing		Other
Interest income:
Education loans	$	925												$	608		$	317	$	—	$	—
Cash and investments		48													28			7		—		13
Total interest income		973													636			324		—		13
Total interest expense		843													603			198		—		36
Net interest income    (loss)		130	$	9		$	(3	)	$	6		$	136		33			126		—		(23	)
Less: provisions for loan    losses		14											14		(2	)		16		—		—
Net interest income    (loss) after provisions    for loan losses		116													35			110		—		(23	)
Other income (loss):
Servicing revenue		18													15			3		—		—
Asset recovery and    business processing    revenue		81													—			—		81		—
Other revenue		18													2			—		—		2
Total other income		117		(9	)		(5	)		(14	)		103		17			3		81		2
Expenses:
Direct operating    expenses		112													16			34		62		—
Unallocated shared    services expenses		54													—			—		—		54
Operating expenses		166		—			—			—			166		16			34		62		54
Goodwill and acquired    intangible asset    impairment and    amortization		3		—			(3	)		(3	)		—		—			—		—		—
Restructuring/other    reorganization    expenses		16		—			—			—			16		—			—		—		16
Total expenses		185		—			(3	)		(3	)		182		16			34		62		70
Income (loss) before    income tax expense    (benefit)		48		—			(5	)		(5	)		43		36			79		19		(91	)
Income tax expense    (benefit)(2)		12		—			(2	)		(2	)		10		8			19		4		(21	)
Net income (loss)	$	36	$	—		$	(3	)	$	(3	)	$	33	$	28		$	60	$	15	$	(70	)

(1)Core Earnings adjustments to GAAP:

	Three Months Ended June 30, 2024
(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	$	6		$	—		$	6
Total other income (loss)		(14	)		—			(14	)
Goodwill and acquired intangible asset impairment and amortization		—			(3	)		(3	)
Total Core Earnings adjustments to GAAP	$	(8	)	$	3			(5	)
Income tax expense (benefit)								(2	)
Net income (loss)							$	(3	)

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

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	Six Months Ended June 30, 2025
			Adjustments											Reportable Segments
(Dollars in millions)	Total GAAP		Reclassi- fications			Additions/ (Subtractions)			Total Adjustments (1)			Total Core Earnings		Federal Education Loans			Consumer Lending		Business Processing		Other
Interest income:
Education loans	$	1,537												$	975		$	562	$	—	$	—
Cash and investments		43													20			10		—		13
Total interest income		1,580													995			572		—		13
Total interest expense		1,322													892			364		—		49
Net interest income    (loss)		258	$	11		$	6		$	17		$	275		103			208		—		(36	)
Less: provisions for loan    losses		67											67		16			51		—		—
Net interest income    (loss) after provisions    for loan losses		191													87			157		—		(36	)
Other income (loss):
Servicing revenue		27													21			6		—		—
Asset recovery and    business processing    revenue		23													—			—		23		—
Other revenue (loss)		3													(1	)		—		—		34
Total other income		53		(11	)		41			30			83		20			6		23		34
Expenses:
Direct operating    expenses		127													37			70		20		—
Unallocated shared    services expenses		100													—			—		—		100
Operating expenses		227		—			—			—			227		37			70		20		100
Goodwill and acquired    intangible asset    impairment and    amortization		2		—			(2	)		(2	)		—		—			—		—		—
Restructuring/other    reorganization    expenses		3		—			—			—			3		—			—		—		3
Total expenses		232		—			(2	)		(2	)		230		37			70		20		103
Income (loss) before    income tax expense    (benefit)		12		—			49			49			61		70			93		3		(105	)
Income tax expense    (benefit)(2)		1		—			13			13			14		16			21		1		(24	)
Net income (loss)	$	11	$	—		$	36		$	36		$	47	$	54		$	72	$	2	$	(81	)

(1)Core Earnings adjustments to GAAP:

	Six Months Ended June 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	$	17	$	—		$	17
Total other income (loss)		30		—			30
Goodwill and acquired intangible asset impairment and amortization		—		(2	)		(2	)
Total Core Earnings adjustments to GAAP	$	47	$	2			49
Income tax expense (benefit)							13
Net income (loss)						$	36

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

30

	Six Months Ended June 30, 2024
			Adjustments											Reportable Segments
(Dollars in millions)	Total GAAP		Reclassi- fications			Additions/ (Subtractions)			Total Adjustments (1)			Total Core Earnings		Federal Education Loans			Consumer Lending		Business Processing		Other
Interest income:
Education loans	$	1,914												$	1,269		$	645	$	—	$	—
Cash and investments		86													51			14		—		21
Total interest income		2,000													1,320			659		—		21
Total interest expense		1,718													1,233			400		—		68
Net interest income    (loss)		282	$	19		$	(2	)	$	17		$	299		87			259		—		(47	)
Less: provisions for loan    losses		26											26		(1	)		27		—		—
Net interest income    (loss) after provisions    for loan losses		256													88			232		—		(47	)
Other income (loss):
Servicing revenue		35													28			7		—		—
Asset recovery and    business processing    revenue		158													—			—		158		—
Other revenue		59													5			1		—		7
Total other income		252		(19	)		(27	)		(46	)		206		33			8		158		7
Expenses:
Direct operating    expenses		231													33			67		131		—
Unallocated shared    services expenses		119													—			—		—		119
Operating expenses		350		—			—			—			350		33			67		131		119
Goodwill and acquired    intangible asset    impairment and    amortization		5		—			(5	)		(5	)		—		—			—		—		—
Restructuring/other    reorganization    expenses		17		—			—			—			17		—			—		—		17
Total expenses		372		—			(5	)		(5	)		367		33			67		131		136
Income (loss) before    income tax expense    (benefit)		136		—			(24	)		(24	)		112		88			173		27		(176	)
Income tax expense    (benefit)(2)		27		—			(1	)		(1	)		26		20			40		6		(40	)
Net income (loss)	$	109	$	—		$	(23	)	$	(23	)	$	86	$	68		$	133	$	21	$	(136	)

(1)Core Earnings adjustments to GAAP:

	Six Months Ended June 30, 2024
(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	$	17		$	—		$	17
Total other income (loss)		(46	)		—			(46	)
Goodwill and acquired intangible asset impairment and amortization		—			(5	)		(5	)
Total Core Earnings adjustments to GAAP	$	(29	)	$	5			(24	)
Income tax expense (benefit)								(1	)
Net income (loss)							$	(23	)

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

31

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

	Three Months Ended June 30,						Six Months Ended June 30,
(Dollars in millions)	2025			2024			2025			2024
GAAP net income (loss)	$	14		$	36		$	11		$	109
Core Earnings adjustments to GAAP:
Net impact of derivative accounting		8			(8	)		47			(29	)
Net impact of goodwill and acquired intangible assets		1			3			2			5
Net income tax effect		(2	)		2			(13	)		1
Total Core Earnings adjustments to GAAP		7			(3	)		36			(23	)
Core Earnings net income	$	21		$	33		$	47		$	86

(1) Derivative Accounting: Core Earnings exclude periodic gains and losses that are caused by the mark-to-market valuations on derivatives that do not qualify for hedge accounting treatment under GAAP, as well as the periodic mark-to-market gains and losses that are a result of ineffectiveness recognized related to effective hedges under GAAP. Under GAAP, for our derivatives that are held to maturity, the mark-to-market gain or loss over the life of the contract will equal $0. In our Core Earnings presentation, we recognize the economic effect of these hedges, which generally results in any net settlement cash paid or received being recognized ratably as an interest expense or revenue over the hedged item’s life.

The accounting for derivatives requires that changes in the fair value of derivative instruments be recognized currently in earnings, with no fair value adjustment of the hedged item, unless specific hedge accounting criteria are met. The gains and losses recorded in “Gains (losses) on derivative and hedging activities, net” and interest expense (for qualifying fair value hedges) are primarily caused by interest rate and foreign currency exchange rate volatility and changing credit spreads during the period as well as the volume and term of derivatives not receiving hedge accounting treatment. We believe that our derivatives are effective economic hedges, and as such, are a critical element of our interest rate and foreign currency risk management strategy. However, some of our derivatives do not qualify for hedge accounting treatment and the stand-alone derivative is adjusted to fair value in the income statement with no consideration for the corresponding change in fair value of the hedged item. See our 2024 Form 10-K for further discussion.

32

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

	Three Months Ended June 30,						Six Months Ended June 30,
(Dollars in millions)	2025			2024			2025		2024
Core Earnings derivative adjustments:
(Gains) losses on derivative and hedging activities, net,    included in other income	$	5		$	(14	)	$	30	$	(46	)
Plus: (Gains) losses on fair value hedging activity included    in interest expense		(4	)		(5	)		2		(5	)
Total (gains) losses in GAAP net income		1			(19	)		32		(51	)
Plus: Reclassification of settlement income (expense) on    derivative and hedging activities, net(1)		5			9			11		19
Mark-to-market (gains) losses on derivative and hedging    activities, net(2)		6			(10	)		43		(32	)
Other derivative accounting adjustments(3)		2			2			4		3
Total net impact of derivative accounting	$	8		$	(8	)	$	47	$	(29	)

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

	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions)	2025		2024		2025		2024
Reclassification of settlements on derivative and    hedging activities:
Net settlement income (expense) on interest rate    swaps reclassified to net interest income	$	5	$	9	$	11	$	19
Total reclassifications of settlement income    (expense) on derivative and hedging activities	$	5	$	9	$	11	$	19

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

	Three Months Ended June 30,						Six Months Ended June 30,
(Dollars in millions)	2025			2024			2025			2024
Fair value hedges	$	4		$	2		$	7		$	(2	)
Foreign currency hedges		(8	)		(7	)		(5	)		(3	)
Other (a)		10			(5	)		41			(27	)
Total mark-to-market (gains) losses on derivative    and hedging activities, net	$	6		$	(10	)	$	43		$	(32	)

(a)Primarily derivatives that are used to economically hedge the origination of fixed rate Private Education Loans that don't qualify for hedge accounting. We believe that these derivatives are effective economic hedges, and as such, are a critical element of our interest rate risk management strategy.

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

33

Cumulative Impact of Derivative Accounting under GAAP compared to Core Earnings

As of June 30, 2025, derivative accounting has decreased GAAP equity by approximately $30 million as a result of cumulative net mark-to-market losses (after tax) recognized under GAAP, but not in Core Earnings. The following table rolls forward the cumulative impact to GAAP equity due to these after-tax mark-to-market net gains and losses related to derivative accounting.

	Three Months Ended June 30,					Six Months Ended June 30,
(Dollars in millions)	2025			2024		2025			2024
Beginning impact of derivative accounting on    GAAP equity	$	(22	)	$	11	$	8		$	(1	)
Net impact of net mark-to-market gains (losses)    under derivative accounting(1)		(8	)		1		(38	)		13
Ending impact of derivative accounting on    GAAP equity	$	(30	)	$	12	$	(30	)	$	12

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