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Navient Corporation (NAVI): New Analyst Report from Zacks Equity Research …


We are initiating our coverage on Navient with an Outperform
recommendation. Navient started operating independently as a loan
management, servicing and asset recovery company following the
separation of SLM Corporation into two distinct publicly-traded
entities in Apr 2014. The company’s third-quarter 2014 earnings
outpaced the Zacks Consensus Estimates. Results were aided by lower
provisions for loan losses, partially offset by lower asset
recovery revenue, reduced net interest income and higher expenses.
Though we remain cautious owing to limited growth opportunities and
the persistent low interest rate environment, we believe Navient
will be able to maintain its leading position in the student
lending market through its continued acquisition of federal and
private student loans.


Following the separation of SLM Corporation into two distinct
publicly-traded entities on Apr 30 2014, Navient Corporation (NAVI)
started operating independently as a loan management, servicing and
asset recovery company. Navient, which is now an SP 500
member, started trading independently on NASDAQ from May 1, 2014.
In Oct 2014, Navient completed the transition of the servicing
operations and introduced the Navient brand to its customers.

Sallie Mae (SLM), the other post-split public company, focuses
on consumer banking.

The separation was part of several initiatives undertaken by
management in 2013 to enhance shareholder value. Other initiatives
included sale of residual interests in several Federally Guaranteed
Student Loans (FFELP) securitization trusts, divestiture of two
subsidiaries and debt repurchases.

Prior to the split, SLM Corporation being a bellwether in
education finance in the U.S., provided funding, delivery and
servicing support for education loans in the U.S. through its
Private Education Loan (PEL) programs and as a servicer and
collector of loans for the U.S. Department of Education (ED). In
addition, the company was the largest holder, service and collector
of loans made under the Federal Family Education Loan Program

Post split, Newark, DE-based Navient continues to hold the
largest portfolio of education loans insured or guaranteed under
the FFELP, as well as the largest portfolio of Private Education
Loans. Navient services its own portfolio of education loans and
also those which are owned by third parties including banks, credit
unions, non-profit education lenders and ED. Navient stands as one
of the four large servicers to ED under its Direct Student Loan
Program (DSLP). The company is also engaged in providing asset
recovery services on its own portfolio (comprising both education
loans as well as other asset classes), and for guaranty agencies.
These guaranty agencies act as intermediaries between the U.S.
federal government and FFELP lenders and are liable for paying
claims on defaulted FFELP Loans. Navient also provides asset
recovery services to ED and other clients.

In 2010, Congress passed legislation that terminated the
origination of education loans under the FFELP program. Outstanding
FFELP Loans will amortize over the next 20 years, approximately.
Navient aims to maximize the cash flow generated by its FFELP Loan
portfolio, including the acquisition of additional FFELP Loans from
third parties and increasing its related servicing business.

Business Segments

The company has four reportable business segments:

FFELP Loans Segment: FFELP Loans are insured or guaranteed by
either state or not-for-profit agencies. These loans are also
secured by contractual rights to recovery from the United States in
accordance with guaranty agreements among ED and the agencies. In
this segment, Navient is engaged in acquiring and financing FFELP
Loans. While the company does not originate FFELP Loans, it
continues to acquire FFELP Loan portfolios so as to leverage its
servicing scale and derive incremental earnings and cash flow. The
company mainly earns net interest income on the FFELP Loan
portfolio. As the portfolio gradually amortizes, the company
expects to derive significant amounts of cash.

Private Education Loans Segment: Private Education Loans are
education loans offered to students or their families that are
non-federal loans and are not insured or guaranteed. The credit
risk in private education loans lies fully on the customers and
cosigner. These loans are mainly aimed at filing up the gaps
between the higher education cost and the amount funded through
financial aid, federal loans or customers’ resources. In this
segment, Navient is engaged in acquiring and financing and
servicing private education loans. While the company does not
originate private education loans, it continues to acquire private
education loans portfolios so as to leverage its servicing scale
and derive incremental earnings and cash flow. The company mainly
earns net interest income on the Private Education Loan portfolio.
As the portfolio gradually amortizes, the company expects to derive
significant amounts of cash.

Business Services Segment: In this segment Navient derives a
significant part of its revenue from servicing FFELP Loan
portfolio. The company also offers servicing and asset recovery
services for loans on behalf of Guarantors of FFELP Loans and other
institutions, including ED.

Other Segment: This segment mainly comprises of activities of
the holding company, including the debt repurchase, the corporate
liquidity portfolio and all overhead. The company also incorporates
results from certain smaller wind-down and discontinued operations
within this segment.

In Jun 2014, Navient obtained extension of its servicing
contract to five more years from the U.S. Department of Education.
As of Sep 30, 2014, the company serviced around 6.1 million
accounts under this contract.

As of Sep 30, 2014, Navient had $140.3 billion in total assets,
FFELP loans of $97.7 billion and private education loans of $30.5

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50 cops were shot and killed on duty this year

NYPD Officers Shot

Fifty officers were shot and killed in the line of duty this year, compared to 32 in 2013, a 56 percent increase, according to preliminary data published by the National Law Enforcement Officers Memorial Fund. Fifteen of those officers died in ambushes, including Officers Rafael Ramos and Wenjian Liu in New York this month.

In a statement, Attorney General Eric Holder said the Justice Department was analyzing the incidents and providing training and equipment to help keep cops safe in ambushes and other situations.

“These troubling statistics underscore the very real dangers that America’s brave law enforcement officers face every time they put on their uniforms,” Holder said.

In general, however, police work is much safer now than it has been in the past. From 1970 to 1979, the average number of officers shot and killed in the line of duty was 127 a year. That figure has declined steadily over the past four decades, as this chart shows. This year’s total of 50 is still far, far too many, but it is slightly lower than the annual average since 2010 of 53 deaths per year. These days, more police officers die of other causes on the job than are killed, the data show.

Happy New Year! Wonkbook will return on Monday, Jan. 5.

Welcome to Wonkbook. To subscribe by e-mail, click here. Send comments, criticism or ideas to Wonkbook at Washpost dot com. Follow Wonkblog on Twitter and Facebook.

What’s in Wonkbook: 1) Opinions, including Friedersdorf on the NYPD’s work stoppage 2) Harvard Law reaches sex-assault agreement 3) Long reads, including James Fallows on the military, and more

Number of the day: 7.1 million. That’s how many people have bought health insurance polices this year in the state and federal marketplaces, including returning customers and those who were automatically reenrolled in existing plans. The data is still incomplete, but that figure shows a major improvement over last year, when technological failures prevented all but 106,000 people from signing up for health insurance in the first month of enrollment. Jason Millman in The Washington Post.

Chart of the day:

This flu season is set to be a miserable one. Already, there are a high number of cases, including many severe ones. Margot Sanger-Katz in The New York Times.

New York cops walk off the job. Data suggest that New York police officers have almost entirely stopped enforcing public order in the past week, apparently because they don’t think the public appreciates the value of their work. Traffic citations, for example, are down 94 percent. The cops should learn to handle criticism and get back on the beat. The New York Times.

FRIEDERSDORF: Conservatives must condemn police insubordination. “What’s unfolding in New York City is, at its core, a public employee union using overheated rhetoric and emotional appeals to rile public employees into insubordination.” The Atlantic.

DAVIDSON: It’s not clear what the police want, exactly. Gentrification has transformed New York, and the city has become much safer, but the police haven’t adjusted. “Suddenly places they didn’t want to patrol are places they can hardly afford to live on an officer’s salary. Their dismay may be understandable. But it should not be enraging.” The New Yorker.

DELISLE: Graduates are not repaying their student loan debt. Nearly 20 percent of borrowers are currently in default, and that does not include those who have received forbearance on their repayments or who are in an income-based repayment plan. For many in this group, the government will eventually have to forgive their loans. The Wall Street Journal.

States that insist on capital punishment should at least make sure it is humane. Fewer inmates were executed this year than at any point in the last two decades, but several executions were particularly gruesome. The Washington Post.

RATTNER: The year in charts. The economy is improving and oil prices are falling, but disparities in income are widening. Meanwhile, Obamacare seems to be working, and the public is more polarized by political ideology than ever. The New York Times.

The law school reached an agreement with the Education Department Tuesday. The department concluded that Harvard had failed to fairly and promptly review allegations of sexual assault. The Harvard case might be the most prominent of the 92 schools whose policies the department is currently examining under Title IX. Juliet Eilperin in The Washington Post.

Primary source: The agreement.

Don’t let stories about sex assault on campus distract from other women’s struggles. Paid sick leave, widely available day care and attention to violence against women off campus would help working and middle class women. But those stories about those topics don’t attract the media’s attention in the same way. Batya Ungar-Sargon in The New Republic.

FALLOWS: Americans are out of touch with their military. And if they’d had more direct experience with it, they might feel more comfortable criticizing it. The Atlantic.

Patients have suffered as hospice has become a for-profit industry. On several metrics, for-profit hospices perform worse than not-for-profit hospices. For example, patients are more likely to drop out of for-profit hospices before they die, indicating they were dissatisfied, they were pushed out to save money or they were pushed into hospice though they had a chance of survival. Peter Whoriskey in The Washington Post.

Americans are working less, but why? A series on declining labor force participation.

– Men are retiring earlier or taking disability.

– It doesn’t seem to be the safety net.

– Perhaps technology is to blame, although if so, that would represent a departure from most of economic history.

– Inadequate maternity leave certainly doesn’t help.

– And not working can be bad for your health.

The New York Times.

Federal Student Loan Debt Tops $800 Billion

Statue of George Washington stands near the University of Texas Tower in Austin, Texas. (AP Photo)

From November 2013 through November 2014, the aggregate balance in the federal direct student loan program–as reported by the Monthly Treasury Statement–rose from $687,149,000,000 to $806,561,000,000, a one-year jump of $119,412,000,000.

The balance on all student loans, including those from private sources, exceeded a trillion dollars as of the end of the third quarter, according to the Federal Reserve Bank of New York.

“Outstanding student loan balances reported on credit reports increased to $1.13 trillion (an increase of $8 billion) as of September 30, 2014, representing about $100 billion increase from one year ago,” the bank said in its latest report on household debt and credit.

Seven years ago, in November 2007, the aggregate balance in the federal direct student loan program was only $98,529,000,000. Since then, it has grown by $708,032,000,000.

This is money that young Americans owe the federal Treasury–and that gives the federal government leverage over their lives.

“Under the DL program, the federal government essentially serves as the banker — it provides the loans to students and their families using federal capital (i.e., funds from the U.S. Treasury), and it owns the loans,” explains the Congressional Research Service.

In fact, the program is a government-funded redistribution of wealth to colleges and universities. The question is: Who will ultimately pay for that wealth transfer?

In 2013, the National Center for Educational Statistics published a study of student aid in the 2011-2012 school year. It showed that 40.2 percent of students attending a postsecondary school had a federal student loan.

The percentages were higher for full-time students and those who attended four-year colleges. Fifty-five percent of students attending college full-time had a federal loan, 58.1 percent of those attending a four-year doctorate-granting institution had a federal loan, and 61.4 percent of those attending a four-year non-doctorate granting institution had a federal loan.

The average amount of a federal student loan during that school year was $6,500.

In 2012, according to the National Association of College and University Business Officers, the University of Texas System had an endowment of $18,263,850,000 — the largest of any state university system. In 2013, that endowment grew 12 percent — or $2,184,463,000 — to hit $20,448,313,000.

Yet, according to the College Board, an in-state student attending the University of Texas at Austin during this school year will pay $26,324 in total costs (including $9,798 in tuition; $11,456 in room and board; $760 for books; $2,280 in personal expenses; and $1,490 in transportation expenses).

The “average indebtedness at graduation” of a University of Texas student is $25,300, says the College Board. This is “the typical amount of loan money a student who attended this college must pay back.” (The College Board does not specify how much of that indebtedness is owed to the federal government.)

In 2012, according to NACUBO, Harvard had an endowment of $30,435,375,000 — the largest of any American university.

In 2013, that endowment grew 6.2 percent — or $1,898,918,000 — to $32,334,293,000.

Yet, according to the College Board, the cost of attending Harvard this year is $62,250 (including $43,938 in tuition, $14,669 in room and board, $1,000 for books and supplies and $2,643 in personal expenses). The “average indebtedness at graduation” of a Harvard student is $12,560.

By doling out a net average of about $100 billion per year in student loans, the federal government allows even the nation’s wealthiest universities to charge students more than they and their families can pay without going into debt.

That makes colleges richer and students poorer.

The federal government already has programs in place to forgive or payoff the student loans of Americans who engage in government-approved activities, or who do not do well enough financially in their after-college years to pay off their own loans.

“Loan forgiveness and loan repayment programs,” says the Congressional Research Service, “typically are intended to support one or more of the following goals: Provide a financial incentive to encourage individuals to enter public service. Provide a financial incentive to encourage individuals to enter a particular profession, occupation, or occupational specialty. Provide a financial incentive to encourage individuals to remain employed in a high-need profession or occupation — often in certain locations or at certain facilities. Provide debt relief to borrowers who, after repaying their student loans as a proportion of their income for an extended period of time, have not completely repaid their entire student loan debt.”

“Currently, over 50 loan forgiveness and loan repayment programs are authorized, and at least 30 of which were operational as of October 1, 2013,” says CRS.

When the government forgives or repays a student loan, it becomes a redistribution of wealth from taxpayers to a person who attended college.

Benny, The Present-Opening Dog

Krauthammer: Republicans Should 'Challenge the President'

Alice Cooper: 'The World Doesn't Belong to Us, the World Belongs to Satan'

The Hidden Student-Debt Bomb

It is time to re-evaluate how we measure the performance of student-loan programs—particularly whether borrowers are or are not meeting their obligations. The traditional measures of nonrepayment—delinquencies and defaults—might be fine for most types of loans, but not for outstanding student loans, nearly all of which are held or backed by the federal government. Lawmakers have provided students with options that let them punt on repayment without triggering delinquency or default. Lately, students have been availing themselves…

Ask Stacy: Help! Student Loan Debt Is Threatening My Daughter’s Future

Student loans are a subject that comes adult often, both in inhabitant media and on this site. After reading this week’s reader question, you’ll know why. Here it is:

We need help. My daughter’s fiancé usually disclosed that he thinks he owes over 100K in tyro loans. He perceived a notice, and now he is in a panic, has no thought how he borrowed that much. Attended propagandize 5 years, though 4 were during a state college; usually a initial year was a private school. we told him to find all of his papers (not certain if that is possible) and to go Direct Loan and imitation out all they uncover he owes. We can afterwards go behind to a colleges and compare.

But what if a loan volume is correct? They devise on removing married soon, and we do not wish my daughter brought down by his borrowing. we wish my daughter and him to find a financial confidant who can assistance them on this. But we live in a small city in upstate New York. Who can they spin to for help? Thank you. — Worried Mom

I wish Worried’s destiny son-in-law’s problem was unique, though he’s unequivocally got company. Some statistics from American Student Assistance:

Student loans were combined to be an engine for amicable mobility, though they are, in fact, tying immature people’s ability to grasp financial success:

  • 27 percent of respondents to ASA’s consult pronounced that they found it formidable to buy daily necessities since of their tyro loans;
  • 63 percent pronounced their debt influenced their ability to make incomparable purchases such as a car;
  • 73 percent pronounced they have put off saving for retirement or other investments; and
  • The immeasurable infancy — 75 percent — indicated that tyro loan debt influenced their preference or ability to squeeze a home.

College should urge your life, not hurt it

Before we start on Worried’s question, a small editorializing: While we’re all obliged for a consequences of a actions, we trust partial of a censure for so most debt rests with America’s aloft preparation system. Fact is, college shouldn’t cost so much, and some-more should be finished to teach students and families about avoiding this arrange of large borrowing.

For example, interjection to technology, it’s comparatively easy to trim tens of thousands from a cost of college. Online training is one. From a 2010 story called “College for $1,000 a Year?“:

Straighterline is a association that provides college classes online for a small fragment of standard college costs – for example, we can take courses for possibly $99 a month and $39 per course, or a prosaic rate of $999 for 10 courses – radically your whole beginner year. You don’t have to ace Algebra 101 to see a savings: That’s adult to 92 percent off what you’d compensate on normal for a year of college during a open or private institution, and finished during your possess pace.

Straighterline isn’t an experiment. It’s one of several for-profit companies that have found a approach to profitably feat a bloated, radically overpriced aloft preparation complement still sticking to a standing quo. Our nation’s universities breed most of a record and creation that’s changing a world. They should strap some of it to make college some-more affordable.

Rather than focusing on creation college some-more obtainable, today’s complement is instead geared to make loans some-more obtainable. The feds yield a loan guarantees, and students and their relatives are led to trust that large loans are simply partial of a college experience.

An essay on Bloomberg Businessweek called “Student Loans: Debt for Life” quotes U.S. Education Secretary Arne Duncan: “Obviously if we have no debt that’s maybe a best situation, though this is not bad debt to have. In fact, it’s unequivocally good debt to have.”

Tell that to Worried Mom’s destiny son-in-law.

Our universities should take some of that on-campus mind energy and refocus it on portion students instead of ancillary a complement that’s apparently collapsing underneath a possess weight. The high cost of aloft preparation is a inhabitant disgrace.

Now let’s get to Worried’s question. We’ll start with a video we did a few months ago.

Watch a video of ‘Ask Stacy: Help! Student Loan Debt Is Threatening My Daughter’s Future’ on

Dealing with college debt

From a Federal Student Aid website:

Before we take out a loan, it’s critical to know that a loan is a authorised requirement that we will be obliged for repaying with interest. You might not have to start repaying your sovereign tyro loans right away, though we don’t have to wait to know your responsibilities as a borrower.

While this is true, there are a few programs designed to assistance those with tyro debt. I’ll list three, from best to worst.

Pay As You Earn. As of Dec. 21, 2012, a Pay As You Earn module became available. The terms change formed on when we took out loans, though for those who took out loans before Jul 1, 2014, payments are generally limited to 10 percent of your discretionary income.

Other advantages: If we accommodate certain requirements, like profitable on time, remaining balances can be forgiven after 20 years. Also, underneath a Public Service Loan Forgiveness Program, if we get a full-time office with a subordinate open use organization, your remaining loan can be forgiven with 10 years of on-time payments.

Income-Based Repayment Plan. Another module is a Income-Based Repayment Plan, or IBR. If we qualify, sum payments are limited to 15 percent of your income. Most sovereign loans validate for this program; private loans don’t.

The differences between Pay As You Earn and IBR:

  • To validate for Pay As You Earn, we can’t have due anything on sovereign tyro loans as of Oct. 1, 2007, and we contingency have perceived a value of a Direct Loan on or after Oct. 1, 2011. IBR doesn’t have that restriction.
  • Only sovereign Direct Loans are authorised for Pay As You Earn; both Direct and Federal Family Education Loans are authorised for IBR.

Income-Contingent Repayment Plan. A third choice is a Income-Contingent Repayment Plan, or ICR Plan. With this plan, what we compensate is formed on income and family size. Payments are typically aloft than those underneath IBR and Pay As You Earn, though a restrictions are fewer.

To find out if he qualifies for any of these programs, Worried’s destiny son-in-law should revisit this page of a Federal Student Aid website. He’ll need information on a forms and amounts of loans he has; he can find information about his sovereign loans during a National Student Loan Data System site. Private loans don’t qualify.

A final probability is a Direct Consolidation Loan. As a name implies, this means usually rolling all your several sovereign loans into one. Then we have one monthly check during a bound seductiveness rate. You can also get revoke payments by fluctuating a amends duration to adult to 30 years, nonetheless longer remuneration durations meant some-more payments and some-more sum interest.

Consolidation could also meant losing advantages that practical to a strange loans, like a probability of loan termination in sell for subordinate work. In short, when we take out a Direct Consolidation Loan, that’s it. You can usually do it once, and your aged loans, along with their terms, intensity rebates and other benefits, are gone.

To learn some-more about this program, check out this page of

The best approach to understanding with college debt

While I’m not a fan of nosiness mothers-in-law, including destiny ones, Worried Mom has a right to be endangered about her destiny son-in-law for during slightest dual reasons. First, he borrowed a ton of money. Next, and some-more importantly, he was apparently astounded to learn how most he had borrowed.

Since we don’t know what career this gentleman’s loans prepared him for, we can’t know that his borrowing will outstrip his ability to repay it. If he’s about to embark on a unequivocally remunerative career, maybe his debt will infer inconsequential. But there’s never an forgive to be astounded by a volume of debt one has. Any obliged person, no matter their age or life experience, should always have a hoop on what they owe.

That being said, branch a blind eye to tyro loan debt isn’t rare. Half of graduates were astounded by how most college-related debt they had acquired, according to a 2013 Fidelity consult of 750 new grads.

Which leads me to my initial square of advice: The best approach to understanding with tyro loan debt is not to punch off some-more than we can gnaw in a initial place. The second best thing to do is delicately guard your levels of debt and have a plan, as specific as possible, to understanding with it when a time comes. Because while we can’t be too educated, a accurate conflicting is loyal of debt. No matter how ardent a pursuit, there’s no indicate in starting life hopelessly behind a 8 ball.

Of course, that recommendation comes too late for this destiny son-in-law. What he should do: Find what service he can by posterior a options above. If it’s too strenuous for him, there are agencies that can help. But counsel is key.

Unfortunately, many for-profit companies are peaceful to yield tyro loan assistance for an unreasonable price. They might assign hundreds of dollars to fill out a same elementary forms we could finish and contention for free. Some might undisguised lie, and during slightest one state has sued dual companies for fraud.

If we do feel so impressed that it is value it to compensate a third celebration to conduct your tyro loan debt, be clever about that association we use. Check with a Better Business Bureau and hunt for online reviews. Above all, be heedful of any association insisting we should stop profitable your loans while it negotiates your debt. That is a surefire approach to default on your loans and, trust me, you don’t wish to go there.

Third-party companies might also explain to assistance with private lenders. Again, there is unequivocally zero they can do that we can’t do yourself, namely: refinance or try to negotiate a forbearance. Private loans offer small flexibility, that is why, if we haven’t taken out any loans yet, we suggest we hang to a sovereign loan programs.

You can be matched with creditable third-party companies we suggest by visiting a MTN Student Loans Solution Center.

Have we attempted to revoke your tyro loan payments? What did we try and how did it work? Share your knowledge in a comments next or on a Facebook page.

Got a doubt you’d like answered?

You can ask a doubt simply by attack “reply” to a email newsletter. If you’re not subscribed, repair that right now by clicking here.

The questions I’m likeliest to answer are those that will seductiveness other readers. In other words, don’t ask for super-specific recommendation that relates usually to you. And if we don’t get to your question, guarantee not to hatred me. we do my best, though we get a lot some-more questions than we have time to answer.

About me

I founded Money Talks News in 1991. I’ve warranted a CPA (now inactive), and have also warranted licenses in stocks, commodities, options principal, mutual funds, life insurance, bonds administrator and genuine estate. Got some time to kill? You can learn some-more about me here.

This essay was creatively published on as ‘Ask Stacy: Help! Student Loan Debt Is Threatening My Daughter’s Future’.

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