Navient Corp.

For the six months ended June 30, 2023, the company generated about 65% ($1.4 billion) in interest income from these loans. In our view, an accelerated run-off in this portfolio due to new federal policy proposals and actions could reduce earnings but bolster the company's liquidity. The stable outlook indicates our expectation that Navient will be able to manage its unsecured debt maturities in the next 12 months and deliver steady operating results. We also expect Navient will maintain a risk-adjusted capital (RAC) ratio over 7.0%. We could lower the ratings in the next 12 months if we think Navient will have difficulty repaying its upcoming unsecured debt maturities or will be unable to sustain a RAC ratio above 7.0%,

...Navient's Federal Family Education Loan Program (FFELP) book continues to be in run-off. As of June 30, 2023, the company's FFELP loans were down to $40.9 billion from $43.5 billion at year-end 2022 and $49.2 billion as of June 2022. The blended weighted average life of this portfolio is 7.3 years, assuming a constant prepayment rate of 6%. For the six months ended June 30, 2023, the company generated about 65% ($1.4 billion) in interest income from these loans. In our view, an accelerated run-off in this portfolio due to new federal policy proposals and actions could reduce earnings but bolster the company's liquidity. Private education loan originations to remain modest in 2023. We expect higher rates will lead to lower refinancing opportunities, resulting in reduced origination volume for private loans in 2023. For the first six months of 2023, Navient originated $365 million of private education loans, versus $1.39 billion in the first six months of 2022....

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