Navient Co. SR NT 6% 121543 (NASDAQ:JSM) reported second-quarter 2026 core earnings of $0.29 per share, aided by several one-time items, while management highlighted accelerating private student loan originations, lower operating expenses and changes to its balance-sheet strategy.
Chief Executive Officer and Board Chair Ed Bramson, who succeeded former CEO David Yowan in June, said the company’s strategic transformation has strengthened liquidity and reduced fixed costs. Bramson said the company is beginning to see benefits from those efforts through higher originations and lower expenses.
Originations Rise as Refinance Demand Accelerates
Combined refinance and in-school loan originations increased more than 60% from the second quarter of 2025 to $815 million. Refinance originations totaled $735 million, bringing year-to-date refinance volume above $1.5 billion, according to Chief Financial Officer Steve Hauber.
Hauber said rate-check activity and refinance originations each rose more than 60% year over year. Newly originated refinance loans had a weighted average FICO score of 774, while approximately 60% of the volume came from borrowers with graduate degrees.
In-school loan originations rose 40% year over year to $80 million. Management said growth has continued during the peak seasonal period and is being supported by demand from the expanded graduate-school lending market. Bramson said the company expects in-school demand to increase in the second half due both to seasonality and changes in government policy and graduate education lending.
Looking further ahead, Bramson said Navient is completing testing of new personal loan products and sees potential for additional demand growth in 2027 and beyond.
Legacy Portfolio Shift and Fair-Value Accounting
The company classified $528 million of legacy private education loans as held for sale at the end of the second quarter. The loans represent just under 10% of Navient’s roughly $5.4 billion legacy private loan portfolio. Bramson said the portfolio remains profitable but does not fit the company’s growth strategy because Navient no longer originates those loans.
The held-for-sale classification released $19 million of loan-loss allowance associated with those loans. At the same time, the company added a $23 million reserve to the remaining private loan portfolio, primarily related to legacy loans. Hauber said private credit performance improved during the quarter, but the pace of improvement moderated and was below management’s expectations.
Private charge-off rates declined to 1.8% in the second quarter from 1.9% in the first quarter. Loans delinquent by at least 31 days fell to 5.4% from 5.5%, while 91-plus day delinquencies declined to 2.4% from 2.5%.
Beginning in the third quarter, Navient will use fair-value accounting for newly originated undergraduate and graduate in-school loans. Loans originated through the second quarter will remain accounted for at amortized cost. Hauber said the new approach eliminates the CECL allowance and near-term provision expense associated with future in-school originations, while better aligning accounting with how the company manages and evaluates those loans.
Management said future in-school loans are expected to be primarily securitized or sold. Bramson said asset-backed securitization remains the near-term default approach because in-school lending volumes have historically been relatively small, though complete loan sales could become more viable as volume increases.
Expenses Fall, Federal Portfolio Continues to Run Off
Total second-quarter expenses were $85 million, down from $100 million in the prior-year period. Year-to-date operating expenses, excluding regulatory and restructuring costs, were $167 million. Hauber said the company remains on pace to meet its full-year operating expense outlook of $350 million or less.
Consumer lending segment net income was $27 million, compared with $26 million a year earlier. Expenses in that segment rose $6 million year over year, primarily due to marketing and origination costs associated with higher loan volume.
Navient’s federal education loan segment generated $26 million in net income, down from $30 million a year earlier as the FFELP portfolio continued to pay down. The second-quarter result included $3 million of accelerated interest expense from the trust call. Hauber said the action is expected to reduce future interest expense and provide additional liquidity.
FFELP charge-off rates improved to 18 basis points from 29 basis points in the first quarter. Loans delinquent by at least 91 days fell to 8.0%, down 50 basis points sequentially and more than 200 basis points from a year earlier.
Capital Allocation and Funding
During the quarter, Navient completed its first in-school securitization of 2026 and its second refinance loan securitization. Hauber said investor demand for recently originated refinance and in-school loans remained strong, with attractive pricing and advance rates.
The company also issued $500 million of unsecured debt while retiring approximately $500 million of unsecured bonds at maturity. Navient returned $17 million to shareholders through dividends and share repurchases during the quarter.
Management said it has a $100 million share-repurchase authorization for the year, with roughly $75 million to $76 million remaining. Bramson said the company must weigh buybacks against capital needs associated with faster loan-originations growth. Hauber said Navient has managed its adjusted tangible equity ratio at 8% or above and expects a range of 8% to 9% to be reasonable going forward.
About Navient Co. SR NT 6% 121543 (NASDAQ:JSM)
Navient Co SR NT 6% 121543 (NASDAQ:JSM) is a series of senior unsecured notes issued by Navient Corporation. The notes carry a fixed annual interest rate of 6.00% and mature on December 15, 2043. As unsecured obligations, they rank pari passu with all of Navient’s other unsubordinated debt and are structurally subordinated to any secured borrowings.
Interest on these notes is payable semi-annually on June 15 and December 15 of each year. Beginning December 15, 2023, Navient has the option to redeem the notes, in whole or in part, at a specified redemption price plus accrued interest, subject to the terms set forth in the governing indenture under which the notes were issued and trade under the ticker symbol JSM.
Navient Corporation, the issuer behind this debt issue, provides asset management and business processing solutions to education loan portfolios in the United States.
