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Segment Reporting | 6 Months Ended
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Jun. 30, 2025
Segment Reporting [Abstract] |
Segment Reporting | 11. Segment Reporting We monitor and assess our ongoing operations and results based on the following three reportable operating segments: Federal Education Loans, Consumer Lending, and Other. As of February 2025, we had divested our Business Processing segment. These segments meet the quantitative thresholds for reportable operating segments. Accordingly, the results of operations of these reportable operating segments are presented separately. The underlying operating segments are used by the Company’s chief operating decision maker, our chief executive officer, to manage the business, review operating performance and allocate resources, and qualify to be aggregated as part of the primary reportable operating segments. As discussed further below, we measure the profitability of our operating segments based on Core Earnings net income. Accordingly, information regarding our reportable operating segments' net income is provided on a Core Earnings basis. Federal Education Loans Segment Navient owns and manages FFELP Loans and is the master servicer on this portfolio. We generate revenue primarily through net interest income on our FFELP Loans. The following table includes asset information for our Federal Education Loans segment.
(Dollars in millions) |  | June 30, 2025 |  |  | December 31, 2024 |
FFELP Loans, net |  | $ | 29,618 |  |  | $ | 30,852 |
Cash and investments(1) |  |  | 938 |  |  |  | 955 |
Other |  |  | 1,832 |  |  |  | 1,818 |
Total assets |  | $ | 32,388 |  |  | $ | 33,625 |
(1) Includes restricted cash and investments. 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are loans where a borrower has refinanced their education loans, and "In-school" Private Education Loans are loans originally made to borrowers while they are attending school.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. The following table includes asset information for our Consumer Lending segment.
(Dollars in millions) |  | June 30, 2025 |  |  | December 31, 2024 |
Private Education Loans, net |  | $ | 15,530 |  |  | $ | 15,716 |
Cash and investments(1) |  |  | 532 |  |  |  | 524 |
Other |  |  | 540 |  |  |  | 569 |
Total assets |  | $ | 16,602 |  |  | $ | 16,809 |
(1) Includes restricted cash and investments. 11. Segment Reporting (Continued) Business Processing Segment In September 2024, Navient completed the sale of Xtend, which comprised the Company's healthcare services business in its Business Processing segment. In February 2025, Navient completed the sale of its government services businesses, which constituted the remainder of the Business Processing segment. Prior to the sale of its healthcare and government services businesses, Navient provided business processing solutions such as omnichannel contact center services, workflow processing, and revenue cycle optimization. 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. At June 30, 2025 and December 31, 2024, the Business Processing segment had total assets of $0 and $103 million, respectively. 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. Unallocated shared services expenses are comprised of costs primarily related to information technology costs related to infrastructure and operations, stock-based compensation expense, accounting, finance, legal, compliance and risk management, regulatory-related expenses, human resources, certain executive management and the Board of Directors. Regulatory-related expenses include actual settlement amounts as well as third-party professional fees we incur in connection with such regulatory matters and are presented net of any insurance reimbursements for covered costs related to such matters. At June 30, 2025 and December 31, 2024, the Other segment had total assets of $1.2 billion and $1.3 billion, respectively. 11. Segment Reporting (Continued) Measure of Profitability We prepare financial statements and present financial results in accordance with GAAP. However, we also evaluate our business segments and present financial results on a basis that differs from GAAP. We refer to this different basis of presentation as Core Earnings. We provide this Core Earnings basis of presentation on a consolidated basis and for each business segment because this is what we review internally when making management decisions regarding our performance and how we allocate resources. We also refer to this information in our presentations with credit rating agencies, lenders and investors. Because our Core Earnings basis of presentation corresponds to our segment financial presentations, we are required by GAAP to provide Core Earnings disclosure in the notes to our consolidated financial statements for our business segments. Core Earnings are not a substitute for reported results under GAAP. We use Core Earnings to manage our business segments because Core Earnings reflect adjustments to GAAP financial results for two items, discussed below, that can create significant volatility mostly due to timing factors generally beyond the control of management. Accordingly, we believe that Core Earnings provide management with a useful basis from which to better evaluate results from ongoing operations against the business plan or against results from prior periods. Consequently, we disclose this information because we believe it provides investors with additional information regarding the operational and performance indicators that are most closely assessed by management. When compared to GAAP results, the two items we remove to result in our Core Earnings presentations are: 1. Mark-to-market gains/losses resulting from our use of derivative instruments to hedge our economic risks that do not qualify for hedge accounting treatment or do qualify for hedge accounting treatment but result in ineffectiveness; and 2. The accounting for goodwill and acquired intangible assets. While GAAP provides a uniform, comprehensive basis of accounting, for the reasons described above, our Core Earnings basis of presentation does not. Core Earnings are subject to certain general and specific limitations that investors should carefully consider. For example, there is no comprehensive, authoritative guidance for management reporting. Our Core Earnings are not defined terms within GAAP and may not be comparable to similarly titled measures reported by other companies. Accordingly, our Core Earnings presentation does not represent a comprehensive basis of accounting. Investors, therefore, may not be able to compare our performance with that of other financial services companies based upon Core Earnings. Core Earnings results are only meant to supplement GAAP results by providing additional information regarding the operational and performance indicators that are most closely used by management, our Board of Directors, credit rating agencies, lenders and investors to assess performance. 11. Segment Reporting (Continued) Segment Results and Reconciliations to GAAP
|  | 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(2) |  |  | 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)(3) |  |  | 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) Reportable segment significant operating expenses are comprised of:
|  | Three Months Ended June 30, 2025 |
(Dollars in millions) |  | Federal Education Loans |  |  | Consumer Lending |  |  | Business Processing |  |  | Other |  |  | Total |
Servicing expenses |  | $ | 16 |  |  | $ | 14 |  |  | $ | — |  |  | $ | 2 |  |  | $ | 32 |
Information technology expenses |  |  | — |  |  |  | 8 |  |  |  | — |  |  |  | 20 |  |  |  | 28 |
Corporate expenses |  |  | — |  |  |  | 1 |  |  |  | — |  |  |  | 19 |  |  |  | 20 |
Other/remaining expenses |  |  | 1 |  |  |  | 13 |  |  |  | — |  |  |  | 6 |  |  |  | 20 |
Operating expenses |  | $ | 17 |  |  | $ | 36 |  |  | $ | — |  |  | $ | 47 |  |  | $ | 100 |
(3) Income taxes are based on a percentage of net income before tax for the individual reportable segment 11. Segment Reporting (Continued)
|  | 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(2) |  |  | 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)(3) |  |  | 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) Reportable segment significant operating expenses are comprised of:
|  | Three Months Ended June 30, 2024 |
(Dollars in millions) |  | Federal Education Loans |  |  | Consumer Lending |  |  | Business Processing |  |  | Other |  |  | Total |
Servicing expenses |  | $ | 10 |  |  | $ | 13 |  |  | $ | — |  |  | $ | — |  |  | $ | 23 |
Information technology expenses |  |  | 3 |  |  |  | 7 |  |  |  | 4 |  |  |  | 20 |  |  |  | 34 |
Corporate expenses |  |  | 1 |  |  |  | 1 |  |  |  | 1 |  |  |  | 21 |  |  |  | 24 |
Other/remaining expenses |  |  | 2 |  |  |  | 13 |  |  |  | 57 |  |  |  | 13 |  |  |  | 85 |
Operating expenses |  | $ | 16 |  |  | $ | 34 |  |  | $ | 62 |  |  | $ | 54 |  |  | $ | 166 |
(3) Income taxes are based on a percentage of net income before tax for the individual reportable segment 11. Segment Reporting (Continued)
|  | 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 |  |  | 3 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (1 | ) |  |  | — |  |  |  | — |  |  |  | 34 |
Total other income (loss) |  |  | 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(2) |  |  | 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)(3) |  |  | 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) Reportable segment significant operating expenses are comprised of:
|  | Six Months Ended June 30, 2025 |
(Dollars in millions) |  | Federal Education Loans |  |  | Consumer Lending |  |  | Business Processing |  |  | Other |  |  | Total |
Servicing expenses |  | $ | 34 |  |  | $ | 28 |  |  | $ | — |  |  | $ | 5 |  |  | $ | 67 |
Information technology expenses |  |  | — |  |  |  | 17 |  |  |  | 1 |  |  |  | 41 |  |  |  | 59 |
Corporate expenses |  |  | 1 |  |  |  | 1 |  |  |  | — |  |  |  | 43 |  |  |  | 45 |
Other/remaining expenses |  |  | 2 |  |  |  | 24 |  |  |  | 19 |  |  |  | 11 |  |  |  | 56 |
Operating expenses |  | $ | 37 |  |  | $ | 70 |  |  | $ | 20 |  |  | $ | 100 |  |  | $ | 227 |
(3) Income taxes are based on a percentage of net income before tax for the individual reportable segment 11. Segment Reporting (Continued)
|  | 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 (loss) |  |  | 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(2) |  |  | 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)(3) |  |  | 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) Reportable segment significant operating expenses are comprised of:
|  | Six Months Ended June 30, 2024 |
(Dollars in millions) |  | Federal Education Loans |  |  | Consumer Lending |  |  | Business Processing |  |  | Other |  |  | Total |
Servicing expenses |  | $ | 22 |  |  | $ | 26 |  |  | $ | — |  |  | $ | — |  |  | $ | 48 |
Information technology expenses |  |  | 6 |  |  |  | 14 |  |  |  | 9 |  |  |  | 42 |  |  |  | 71 |
Corporate expenses |  |  | 2 |  |  |  | 2 |  |  |  | 2 |  |  |  | 49 |  |  |  | 55 |
Other/remaining expenses |  |  | 3 |  |  |  | 25 |  |  |  | 120 |  |  |  | 28 |  |  |  | 176 |
Operating expenses |  | $ | 33 |  |  | $ | 67 |  |  | $ | 131 |  |  | $ | 119 |  |  | $ | 350 |
(3) Income taxes are based on a percentage of net income before tax for the individual reportable segment 11. Segment Reporting (Continued) Summary of Core Earnings Adjustments to GAAP
|  | 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(1) |  |  | 8 |  |  |  | (8 | ) |  |  | 47 |  |  |  | (29 | )
Net impact of goodwill and acquired intangible assets(2) |  |  | 1 |  |  |  | 3 |  |  |  | 2 |  |  |  | 5 |
Net tax effect(3) |  |  | (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. (2) Goodwill and acquired intangible assets: Our Core Earnings exclude goodwill and intangible asset impairment and amortization of acquired intangible assets. (3) Net tax effect: Such tax effect is based upon our Core Earnings effective tax rate for the year.

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