Navient : 1st Quarter 2024 Earnings Presentation

Maximize the cash flows from our loan portfolios

Continuously simplify the business and increase efficiency

• Manage credit and interest rate risk and help borrowers manage loans
• Originate high-quality private education loans with attractive economics

• Align scale of platforms, processes and operations to scale of businesses
• Make cost structure more efficient and variable
• Model and build on prior actions such as the sale of the servicing platform, exiting ED servicing, reducing real estate footprint

I N C R E A S E D F R E E C A S H F L O W S

Enhance the value of our growth businesses

Maintain a strong balance sheet and distribute excess capital

• Invest in capabilities to grow high-quality private education loan originations that generate targeted returns, and explore opportunities to deepen relationships through product extensions
• Explore strategic options for BPS including divestment
• Maintain a strong and flexible balance sheet, stable credit ratings, and reduce unsecured debt footprint
• Deploy capital to support planned business growth and prepare for a range of economic environments
• Reliably distribute excess capital to shareholders in form of dividends and share repurchases

Outsource student loan servicing and create variable expense model

Explore strategic options for business processing division, including potential divestment

Streamline shared services infrastructure and corporate footprint

• Began implementing variable cost outsourced servicing model, which aligns with amortizing legacy portfolio and facilitates corporate expense reduction
• Expect to finalize transaction in 2Q24 with nearly 900 employees transitioning
• Maximize net value of loan portfolio cash flows
• Initiated divestment process and in active discussions with potential buyers
• Divestiture projected to enable further corporate expense reduction
• Began planning for a leaner structure and corporate overhead reductions
• Implementation started and expected to continue through 2024 and into 2025

1Q 2024 Results

"We have made substantial progress on the three strategic actions launched earlier this year to outsource student loan servicing, explore strategic options for our business processing division, and streamline our shared service infrastructure and corporate footprint. We are nearing completion of a final outsourcing agreement - which will pave the way for the transition of nearly 900 employees to support seamless service for our customers. Further, we expect to be in a position to decide on the options to divest our business processing division. We are beginning to execute our plans for a leaner company. When completed, we believe these actions will simplify our business, reduce our expense base, and increase our financial and operating flexibility. "

• David Yowan, CEO

2024 Outlook

Federal Education Loans -

1Q 2024 Core Earnings Results

• Net income was $40 million compared to $87 million
• Net interest income decreased $72 million primarily due to:
• • the impact of increased interest rates on the different index resets for the segment's assets and debt
  • the paydown of the loan portfolio included an increase in prepayments
• Provision for loan losses decreased $9 million
• Other revenue decreased $2 million primarily due to the paydown of the loan portfolio serviced for third parties
• Expenses were $3 million lower primarily as a result of the paydown of the loan portfolio

FFELP Prepayments Accelerate Cash Flow

There is a short term lag between when loan prepayments occur and when the cash received is applied to Asset Backed Securitization debt paydowns.

$3,000

$2,500

$2,000

$1,500

$1,000

$500

$0

Policy-Driven Prepayments represent the loan prepayments that are believed to have been catalyzed by Department of Education programs and/or other government policy. Policy-Driven Prepayments represent loans that have consolidated to the Direct Consolidation Loan program as well as non-defaulted loans repaid by guarantors by direction of the Department of Education. Policy-Driven Prepayments exclude defaulted loans repaid by guarantors, full and partial voluntary prepayments, and other activity.

Restricted Cash represents the month-end balance of restricted cash related to the FFELP portfolio; periodic balance fluctuations result from trust distributions.

• The Impacts of FFELP Loan Prepayments
• • Loan prepayments accelerate loan principal cash flows
  • The immediate impact is to increase restricted cash
  • Restricted cash from loan prepayments are generally applied with a short time lag to pay down ABS debt with excess distributed to Navient, typically
  • FFELP loan prepayments accelerate loan premium amortization. This
    non-cash expense does not impact current period or future life-of-loan cash flows.

Consumer Lending -

1Q 2024 Core Earnings Results

• Originated $259 million of Private Education Loans compared to $168 million
• • Refinance Loan originations were $228 million compared to $135 million
  • In-schoolloan originations were $31 million compared to $33 million
• Net income was $73 million compared to $110 million
• Net interest income decreased $19 million primarily due to the paydown of portfolio
• Provision for loan losses increased $35 million
• • The $11 million provision this quarter included $5 million in connection with loan originations and $6 million related to a general reserve build
  • The negative provision for loan losses of $(24) million in 1Q23 was primarily driven by the adoption of a new accounting standard
• Expenses decreased $5 million

1Q 2024 Allowance for Loan Losses

($ in millions)

$1,058

$961

• Our total provision expense was $12 million in 1Q24

• This primarily consists of:

- $1 million for our FFELP portfolio

- $6 million related to a general reserve build for our Consumer Lending portfolio

- $5 million for new Private Education Loan originations

• Total net charge-offs of $109 million during 1Q24

- $28 million of this quarter's net

Business Processing -

1Q 2024 Core Earnings Results

• Revenue was $77 million, $5 million higher due to continued organic growth
• Net income was $6 million compared to $4 million
• EBITDA 1 was $9 million, up
  $4 million, primarily the result of the increase in revenue and the reduction of certain costs
• EBITDA margin was 11%, up from 7%

1Q 2024 Capital Allocation

For illustrative purposes only, total bars shown not to scale. Numbers may not total due to rounding.

• Adjusted Tangible Equity 1 ratio of 8.4%
• We distributed $61 million in 1Q24 to shareholders through dividends and share repurchases
• We ended the quarter with 83% of our Total Education Loan Portfolio funded to term
• We have $5.9 billion in unsecured debt outstanding