Navient Corporation

Good day and welcome to the Naviant third quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jen Arias, Head of Investor Relations. Please go ahead.

Thank you, Abigail. Hello, good morning, and welcome to Navient's earnings call for the third quarter of 2023. With me today are Dave Yohan, Navient CEO, and Joe Fisher, Navient CFO. After the prepared remarks, we're going to open the call up for some questions. You can view and download presentation slides, including slides you may find useful during this call on Naviant.com slash investors. Before we begin, keep in mind our discussion will contain predictions, expectations, forward-looking statements, and other information about our business that is based on management's current expectations as of the date of this presentation. Actual results in the future may be materially different from those discussed here. This could be due to a variety of factors. Listeners should refer to the discussion of this factor from the company's Form 10-K and other filings with the SEC. During this conference call, we will refer to non-GAAP financial measures, including core earnings, adjustable tangible equity ratio, and other various non-GAAP financial measures that are derived from core earnings. Our GAAP results and description of our non-GAAP financial measures can be found in the third quarter 2023 earnings release, which is posted on naviant.com slash investors. You will find more information about these measures beginning on page 18 of Navient's third quarter 2023 earnings release. There is also a full reconciliation of core earnings to GAAP included in the disclosure. Thank you, and I will now turn the call over to Dave.

Great. Thanks, Jen. Good morning, everyone. Thank you for joining the call and for your interest in Navient. Our results for the quarter reflect our strong foundation of assets and capabilities, as well as initial actions we are taking to deliver more value to shareholders. We achieved consistent net interest margins and credit performance, generated strong revenue growth in traditional business processing services, and lowered operating expenses. Last quarter, I discussed the in-depth and holistic review of our entire business. I'm pleased to report that this important work is well underway and we're making substantial progress. You'll see some of the actions we've already taken reflected in our results this quarter. Core earnings for the quarter were 47 cents per share. Excluding significant items, core earnings were 84 cents per share. We've taken a $45 million accrual, or 28 cents per share, in connection with the CFPB litigation. We accrued for legal matters as required based on developments over the quarter. We remain confident about the strength of our case. At the same time, we're open to finding a solution that's acceptable to all parties to put this matter behind us. In addition, as part of our regular quarterly review of critical accounting assumptions, we updated certain accounting assumptions in the third quarter. These updates slightly reduced our overall results. Joe will highlight the impacts to individual line items in his remarks. We remain focused on helping our borrowers who have federally owned student loans successfully navigate the resumption of payments, which includes helping them identify and access various repayment options. While it's still early days, we have not yet seen significant changes to repayment patterns on loans we hold. Let me turn to our in-depth review. As I mentioned, while the bulk of the review work remains ongoing, initial insights led us to take some initial important actions. For example, we've reduced the substantial capital investment we had planned to make this year in in-school originations. And we're evaluating ways to reduce capital intensity and generate higher returns in this activity. I'll talk more about this action shortly. The scope of the reviews are comprehensive and being conducted with an open mind and a critical eye. There's no part of our business exempt from a hard look and a set of tough questions. We're also evaluating opportunities to variabilize costs across several parts of our business, including within our loan servicing activities. There are several cross-functional teams across multiple work streams. each grounded in the ultimate goal of identifying and evaluating a range of alternatives to deliver greater value to our shareholders. The executive team and I are managing the effort with regular and frequent updates and clear oversight from our board. We're pleased with the progress we've made in identifying and evaluating alternatives, and in certain instances, beginning to take actions. We look forward to continuing to provide updates as we move forward. Let me now discuss loan originations and the actions I took. We originated 204 million of in-school loans during the quarter, bringing our year-to-date total to 292 million. The year-to-date total is flat to last year. This reflects actions we took to reduce loan acquisition spending, the overall interest rate environment, and changes in interest rates on federal student loans. Our plans for the year had included an ambitious in-school loan origination growth target. That target required a substantial and long-term commitment of capital for loan acquisition costs, to establish life of loan loss reserves, and equity and unsecured debt capital. I needed to be more confident that we could achieve our targeted returns before committing that capital. As a result, I implemented a reduction in our in-school acquisition spending during the third quarter. We also adjusted our pricing in the marketplace during the third quarter to improve our margins. We took these two steps while remaining disciplined about maintaining high credit quality. These actions impacted our volume. Our in-school origination volumes also reflect a changing mix between graduate and undergraduate students. our lending to undergraduate students grew 22% year-to-date compared to the same period last year to 163 million. At the same time, our graduate volume, which represents a higher percentage than the overall in-school market, was down. There was a much smaller difference this year compared to last year in the rate of a federal graduate loan compared to a private loan. which was another contributing factor to our graduate volume being down. We have confidence in our capabilities and in the opportunities in the in-school market. We're evaluating ways to enhance capital efficiency. We believe that we can grow steadily and sustainably with margins and credit quality that deliver appropriate returns. Our refi originations during the quarter were $178 million, bringing our year-to-date total to $456 million. As we've discussed previously, the addressable market in refi is driven primarily by interest rates. While we experienced a modest increase in interest in refinancing from federal borrowers as the government payment resumption date approached, we continue to view the opportunity in refi originations to remain more limited than in prior years until rates decline significantly. Our business processing solution segment had a strong quarter. Revenue from traditional services increased 33% year over year. This segment's growing organically with very low capital requirements. The trends we're seeing in many of our target markets are encouraging and our pipeline of potential new business is promising. In the healthcare space, we're seeing renewed post-pandemic interest by medical systems and other healthcare providers. Our extend healthcare affiliate has strong credentials to navigate the increasing complexity of claims processing while providing clients with lower costs and increased cash flows. Within government services, we've grown by achieving a high percentage of contract renewals, winning new business, and applying our capabilities to new types of clients. We provide on-the-channel contact centers, that allow federal agencies, states, municipalities, tolling and parking authorities to better serve their constituents and manage revenue streams. To close out my remarks, we've achieved strong results this past quarter. While continuing to execute well against our plans for the year, we also have taken initial actions resulting from the review of our businesses and we're making great progress on ways in which we can deliver more. We look forward to providing a comprehensive update on our review as soon as possible. I want to acknowledge and thank my colleagues across the organization who make it possible to deliver these results while also focusing on ways to deliver greater value to shareholders. With that, I will turn it over to Joe for a review of this quarter's results, and I look forward to your questions later in the call.

Thank you, Dave. And thank you to everyone on today's call for your interest in that. During my prepared remarks, I will review the third quarter results for 2023 and provide updated guidance for the remainder of the year. Key highlights from the quarter beginning on slide three include third quarter gap EPS of 65 cents and core EPS of 47 cents, which contains significant items that reduced earnings by $58 million for 37 cents that I will discuss in greater detail as I review our segment results. Self NIM of 152 basis points, consumer lending NIM of 317 basis points, originations of $382 million, business processing revenues of $85 million with an EBITDA margin of 15%, and overall efficiency ratio of 49% We maintained an adjusted tangible equity ratio of 8.7% while returning $94 million to shareholders through dividends and repurchases. I'll provide additional detail by segment beginning with federal education loans on slide four. As part of the quarterly review of our critical accounting assumptions, we updated our assumptions to reflect longer remaining life expectations on the portfolio. The increase in expected remaining loan terms resulted in slower premium amortization and increased both the felt NIM and provision in the quarter. The felt NIM of 152 basis points benefited from the revised estimate by $48 million, or 45 basis points. After adjusting for this, our net interest margin was 107 basis points, which is in line with our expectations of 100 to 110 basis points for the full year. Partially offsetting the benefit to NIM from the extension of the cell portfolio was an increase in provision of $36 million as a greater amount of loan premium will need to be charged off in the future. Delinquencies declined to 16.8% from 18.6% with forbearances flat year over year. Net charge-offs increased to 19 basis points and are consistent with our expectations of 10 to 20 basis points for the full year. So let's turn to our consumer lending segment on slide five. We are seeing a slowdown of prepayment speeds in our private education refinance portfolio as borrowers with fixed interest rates have less of an incentive to refinance in the current higher rate environment. The resulting increase in the expected life of loan and its impact on loan premium amortization benefited the consumer lending man by $10 million for 21 basis points in the quarter. Adjusting for this benefit, we saw a net interest margin of 296 basis points, which is above our expectations of 280 to 290 basis points for the year. Another significant item was a reduction in our expected recovery rate on previously charged off loans. This reduction contributed to $29 million over $36 million in total provision expenses for the quarter. Our credit performed as expected as charge off rates improved to 1.66% from 2.01% from a year ago with stable late-stage delinquencies and forbearances. In the quarter, we originated $382 million of private education loans. This was comprised of $178 million of refinanced loan origination volume and $204 million of new in-school origination volume. Our in-school volume was driven in large part by the factors that Dave discussed. our focus on generating high-quality loans at traditional four-year, not-for-profit institutions with efficient acquisition costs and targeted margins. Turning to allowance for loan losses and related coverage on slide six, we remain confident that we are adequately reserved for the expected life of loan losses given the well-seasoned and high credit quality of our portfolio. At the end of the third quarter, our allowance for loan losses was just under $1.1 billion for our entire education loan portfolio. While early indicators are positive, we continue to remain cautious in our outlook as borrowers with over $1.5 trillion in education loan balances that are not on our balance sheet but held by the U.S. government have begun making payments on their federal loans. And while the portfolio is primarily amortizing, We reserve $36 million for the felt loans related largely to a projected extension in the life of the portfolio and $36 million for private education loans, of which $12 million is related to new origination volume and $29 million is related to the recovery adjustment I mentioned earlier in my remarks, which was partially offset by a $5 million release. Let's continue to slide seven to review our business processing segments. Total revenue increased $6 million to $85 million as revenue from our traditional BPS services increased $21 million, or 33%, more than fully offsetting revenue associated with pandemic-related contracts from a year ago. Our EBITDA margin was 15% in the quarter and has steadily increased since the beginning of the year as we benefit from ongoing efficiency initiatives and the onboarding of new government services contracts. Turn to our capital allocation and financing activity that is highlighted on slide 8. We continue to maintain discipline, asset liability, and capital management strategies with 84% of our education loan portfolio funded to term. Our adjusted tangible equity ratio of 8.7% is in line with our target range of 8 to 9% and up from 7.8% a year ago. In the quarter, we reduced our share count by 3% through the purchase of 4.2 million shares. In total, we returned $94 million to shareholders through share repurchases and dividends. Let's turn to expenses on slide nine. Our continued efforts to improve efficiency resulted in total expenses of $237 million, including a $45 million accrual related to developments in connection with the CFPB matter. We remain focused on identifying additional ways to accelerate expense reduction. Operating expenses declined 32% in the federal education segment and 8% in the corporate other segment when adjusting for the accrual as we continue to reduce costs associated with the amortization of our legacy portfolios. The increase in BPS expenses of $6 million was related to higher revenues as EBITDA remained stable year over year. We achieved an efficiency ratio of 49% in the quarter and are currently at 52% for the year, better than our original four-year guidance of 55 to 58%. In closing, the third quarter's results of 84 cents per share and taking into account the significant items I highlighted earlier in my remarks reflect the steps we have taken to efficiently loan portfolio, achieve profitable growth, and maintain strong capital levels. We're confident in our ability to deliver for the remainder of the year and are updating our full-year core EPS guidance to a range of $2.92 to $3.02, which includes the impact of the significant items highlighted in the quarter. Before I close, I would first like to thank the full team at Navient for their continued commitment to creating further value for all of our stakeholders. Thank you for your time, and I will now open the call for questions.

Thank you. At this time, we'll conduct the question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. One moment for our first question. Our first question comes from Sanjay Sakrani with KBW. Your line is open.

Thanks. Can we just dig a little bit more deeper into the review? I know there's a lot of actions that have been taken, but maybe you can just update us, Dave, on sort of where we are and what else we can expect.

Sure. Good morning. So as I've indicated, this is a holistic and very in-depth review. We've got a number of cross-functional teams and a number of work streams that we have organized ourselves around, and we're doing a deep dive into our existing strategies, processes, and operations to better understand them, not just as they exist today, but over a longer-term time horizon. As we do that, we're trying to identify ways in which we could do things differently or do different things, as I like to say, that would improve our ability to deliver to shareholders. We have today announced a couple things that have come out, some initial actions that we've taken out of those reviews. When I talk about the I'm pleased with the substantial performance or progress we've had on these reviews, that indicates that I think we've got some other things that we've not announced, but we're looking at very carefully and very closely. And as soon as we're able to share those with you, we intend to do so.

Okay, great. I have a question on the CFPB case. I mean, what can we infer from the charge? Is that an offer or is that representation of tangible progress towards the resolution?

Yeah, so as you can, I'm sure, appreciate, I'm not going to discuss the specifics of the case or any other elements of it. I would, you know, repeat what we've said, which is we're very confident in the strength of our case. At the same time, we're open to a out-of-court settlement that's acceptable to all parties. And the accrual that we made this quarter reflects the developments to date in that matter. You know, we also expect to file our 10Q later today, Sanjay, and in that 10Q under the contingency section, you'll see the establishment of a reasonably possible loss related to this matter and a more robust discussion of the case and the uncertainties that surround the accrual and the reasonably possible loss. The range on that reasonably possible loss is zero to $250 million. And I would encourage everyone to read that and the language surrounding it when we publish it carefully. And I think that'll give you a better sense of where we are today in terms of the case. Okay.

If you don't mind, can I just get one more question? I know it's more than the two allotment, but just on the in-school origination slowdown, you know, is this a good run rate going forward? Maybe you can just give us a sense of sort of how we should think about it and just this impact of higher pricing and backing away from the market. You know, what kind of impact does it have in your position in the market? You know, I'm just trying to think about, because there was a lot of work to get into the in-school channel. I'm just wondering if you back away from it, does that have an impact? on you utilizing it going forward?

Yeah, so I would not characterize this as backing away from it. I would characterize this as a pause in the substantial capital commitment that was associated with the plan for the year to double origination volume. I was not confident that given the substantial amount of capital involved in this activity, and I'm talking about loan acquisition costs, upfront provision for life of loan loss, looking at the margins we were generating, the amount of equity capital that we set against that, the amount of unskilled debt capital that we need after we do ABS financing. And so those amounts were substantial. Given the long life of a student loan asset it's also a very long-term commitment of capital and so i felt the right thing to do was to pause on that until we could i could make sure that the combination of those all those different capital investments were going to produce an appropriate return for our shareholders i think and said in in my remarks i think we have uh a strong set of capabilities, and I think there is an opportunity for us in this market. You did see us grow undergraduate volume by 22% year-on-year. That was a key focus for us this year, and so I think the team did a nice job of doing that. There's some underlying metrics and signs. Our ability, for example, to be on preferred lender lists at the colleges that we're targeting also increased. So we're you know, laying the foundation for being in the market and being an able competitor in that market, I would say that I think the strategy to grow in that market is one that is steadier and more sustainable than the ambitious target that we had this year. Okay. Thank you very much.

You bet. One moment for our next question. Our next question comes from Rick Shane with JP Morgan. Your line is open.

Thanks, everybody, for taking my questions this morning. You know, I think I'm trying to understand the implications of your response to Sanjay's question and also sort of the tactical approach to in-school originations right now. As you look forward based upon the strategic review, one thing we could conclude is that you are moving more and more towards a capital light model. But at the same time, when we think about the business and the comments you just made about building the in-school network and building the preferred lenders list, maybe there's a different way to interpret that. Help us understand sort of what the vision is going to be. Do you see Navient more and more capital lighter? Do you really want to ultimately grow that private student lending business again?

Yeah. So thanks for the question, Rick. I'm not sure those two things are mutually exclusive. You know, I'd go back to maybe a little more color on in-school as well. I mentioned it in my remarks. But on the graduate market, there was a significant change in the coupon associated with federal loans versus private loans this year compared to last year. So just given the way federal loans, and I'm talking about grad plus loans, get priced, those affected increased year on year roughly 50 basis points in rates. private loans like ours increase close to 200 basis points because they're more market rate driven. So if you just look at coupon, not APR given the fee associated with grad plus, for most of this period, the coupon on a private loan like ours in the graduate space was lower than a federal loan last year. but it's higher this year. So when you look at our origination volume, we did pull back on loan acquisition spending. That certainly impacted our volume. But if you look at our mix of graduate and undergraduate, we're much more weighted towards graduate volume than the overall market. And that rate environment played a role in our graduate volume, which is downward. 15%, 16% compared to last year. So part of that is my reason for my confidence of our ability to operate in the market is we had a rate differential this year that made it much more challenging in the graduate market. And so I don't want to lose sight of that. I don't want you to lose sight of that when you look at our volume and you think about our strategy going forward. You know, we do need to... We are looking for ways to reduce the capital intensity of this activity. We have a cost of capital. We need to earn returns in excess of that to deliver value to our shareholders. There's a variety of levers that we can pull. If you talk about the drivers of the returns in this business, we do have long-term plans become more efficient in our loan acquisition expense. Serialization is a big part of that. We're looking at ways, how can we accelerate our efforts to be more efficient in terms of acquiring the provision expenses as a function of our credit quality. We need to make sure that we're really disciplined about that and have the right reserve set against that. And I'm confident that we're doing that. So we have to keep doing that. On the margin side, we increased our margin this year compared to last year and in school by a little less than 100 basis points. I think we still have some room to further improve that, but one of the ways you reduce capital intensity is to increase the amount of capital you can generate from an activity, and so we're trying to make sure we're doing that as well. And then, you know, we are open to, and we talked about this, I think, a little bit on the last call, you know, we have the flexibility to hold assets, we have the flexibility as others in the industry do to sell assets from time to time. And so if there are cheaper sources of capital to own the principle of these loans, you know, we're certainly open to that and are trying to make the enterprise, as you indicate, less capital intensive. We think that's absolutely something that we're going to look at very long and hard and find ways to do that.

Got it. That's very helpful. It helps us understand sort of the palette of considerations that you're looking at. And I appreciate there can be, you know, we may have to hold two or three thoughts in our head at one time. It's a little harder at 530 in the morning, but I do appreciate it.

One moment for our next question. Our next question comes from Bill Ryan with Seaport Research Partners. Your line is open.

Thanks and good morning. So first question, I want to take a step back to September. And there were some initial indications that there may have been some pickup in federal student loan, you know, fell portfolio refi activity, because I believe that you had to consolidate under the direct loan program to qualify for IDR or the proposed IDR guidelines. Obviously, with what you did accounting-wise this quarter, it looks like you did think that, well, it really became a non-event. And I'm kind of curious what's kind of changed in that, because initially there may have been some concern, and that's obviously dissipated. And part of that is, does that also mean, you know, the private activity, that you're really not seeing a big uptick in application flow there for refinance either?

And so I would ask this. or answer the second part first. So on the WeFi, we are seeing just a small tick up, which you can see from last quarter to this quarter. So that's primarily driven from borrowers coming from the direct loan program that otherwise we'd be financing before. The first part of your question, I would say over the last year, we obviously saw slower prepayments than we have had in the past two years and more on a normalized or below normalized levels. That has led to, in terms of what we're witnessing in the portfolio, a view that there is an extension of the portfolio. That combined with an increase in the Stafford rates to the borrower without necessarily an increase to what they are paying, because keep in mind those Stafford loans reset every year, but if they are in payment plans where that is a steady payment, that just naturally increases the terms. So all of these indicators are pointing to an extension of the portfolio. However, in saying that, there are a number of opportunities in place today for borrowers to consolidate to the direct loan program. And if you are a distressed borrower or someone who is struggling to make a payment, you should be looking at those programs hard and you should be taking advantage of those and either contacting us or picking up the phone when we call you with these solutions. So I still encourage those borrowers to look at those solutions and what makes sense for them. But at this point, we're just not seeing it in the activity in our portfolio.

Okay, thanks for the color on that. And just one follow-up, and I'm just going to throw it out there. Your discussion of the in-school channel, you're obviously still very committed to it in the long term. You talked about the capital intensity and other things. There's been some discussion that one of your competitors may be looking to dispose of their business or looking for strategic alternatives. It seems like that could alleviate a lot of the pressures. I mean, it overcomes the ceaseless growth issue. There's ways it could be structured, et cetera, et cetera. Is that something that you might consider as an opportunity if such a business becomes available? Thanks.

Hey, Bill. Good morning. I appreciate the question. We're very focused right now on our in-depth reviews, and I wouldn't comment on what other competitors are doing at this point. Okay. Thank you. Beth.

Thank you. As a reminder, to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced. one moment for our next question. Our next question comes from Aaron Saganovich with Citi. Your line is open.

Thanks. So maybe, Joe, you could talk about the extension of the loan portfolios and how that's impacting the net interest margins. I see that there's the big catch-ups this quarter. It seems like things are moving kind of in line. How does that set it up for 2024 as we think about it rolling into next year?

Yeah, so what I tried to do in my remarks is just remove the – The significant items in terms of the adjustments that took place here. So give you a clear look of what occurred in the quarter at some of those and that's while we recorded felt name of 152. 45 basis points was related to that extension so that 107 is right in our range of 100 to 110 basis points and then similarly with the private portfolio while we reported 317 adjusting for that item or closer to 296. So above our guidance so. a lot of moving pieces here in terms of interest rate environment, just borrower activity with various programs that are in place. But I would say, at least as we look in the near term and the way that the curve is shaped, that we're comfortable with the ranges that we've given and what we're seeing. I would say, while the curve is somewhat downward sloping at this point, could put some pressure on the felt men. That's a slight positive for the private portfolio, so somewhat of an offset there.

Okay, got it. And David, I guess on the slowing of the in-school originations, I'm a little bit confused to tell you the truth. You're talking about a doubling of last year's originations, which was really not that much, a couple hundred million relative to the market size. You have competitors who do billions of dollars And the idea of it being too capital-intensive just seems at least at odds with what we see in the marketplace. And I don't know if it's just a matter of you're just starting from such a slow level. If you have other items that you need capital for in the near term, it doesn't really hit well, I think, at least from our standpoint.

I guess I do view it as capital-intensive, certainly relative to other, for example, to other consumer assets, Aaron. Just given the cost of origination, I think you have some visibility into the life of loan loss reserve, all those two things consume equity capital. and we're trying to be good stewards of that capital and make sure that when we commit significant amounts to it, we're earning great returns on that. You know, we have a 10% equity weight against SLO loans. The advance rate on the securitizations of SLO loans plus the equity we put against it doesn't fully finance the loans, and so we have to issue unsecured debt in order to finance that. Those are the things, particularly given perhaps my background as a balance sheet manager, those are capital intensive on a unit basis. We're not capital constrained. It's not that we didn't have the capital. I didn't want to commit that substantial amount of capital over a long period of time until I was more confident that we were going to earn the returns that I think our shareholders expect from us.

Yeah, I mean, I appreciate that it is a more capital-intensive, you know, product, and they are longer duration, but, you know, I would just say that you're either in the business or you're not in the business, and to, you know, pull back to that kind of level, at least from prior expectations, just seems you know, a little at odds.

Yeah, we are, to be clear, we are in this. Okay, thanks.

One moment for our next question. Our next question comes from Jeff Adelson with Morgan Stanley. Your line is open.

Hey, good morning. Thanks for taking my questions. Just to revisit the CFPB matter, I guess the question I have, and I know we're going to get some more detail in the queue later today, but why establish the reasonably loss estimate now? Was there a shift in the conversation? Is there anything happening in the ongoing dialogue with the CFPB, or is this more like a result of the ongoing review you've been doing across the business?

Thanks for the question, Jeff. Look, we said that the accrual and the establishment of the reasonably possible loss that you'll see in our queue are based on developments in the matter since we last reported through to today. And I think I'll just leave it at that, and I encourage you to read the queue, and that may provide a little more illumination to it.

Okay. We'll look out for that. And just on your pre-pay-speed assumptions, I think maybe we're a little surprised that there haven't been more folks taking advantage of the opportunity to consolidate into the government loan to get the IDR benefit. Is there any reason why some of your elongated borrowers wouldn't be consolidating over? Is it just they don't, you know, their incomes are too high? maybe just help us understand. I think last quarter you mentioned like happier loans or in an IDR plan already.

Yeah, so it's a good question and I think that we all going back a year probably would have expected to see even higher consolidation volume at that time given the opportunities potentially for loan forgiveness. So I'll just try to set a basis of thinking about the SELF portfolio where these are very well-seasoned borrowers at this point in time. The last loans that we originated and held on balance sheet began in 2008. So you're talking about 15 years where there have been a substantial amount of programs and opportunities to consolidate over time with various benefits that, for whatever reason, borrowers have not taken advantage of. As I said earlier, I would encourage those borrowers that are struggling to make payments where there is an opportunity for them in the direct loan program that isn't necessarily there in the FFEL program, that they should be taking advantage of that. But today, we just haven't seen it over the course of the year. And looking at the portfolio, it's naturally extending. We thought it was appropriate to take those adjustments this quarter.

And maybe just the last one question is the July change in the SAVE plan, is that a date you're watching at all, or just based on the activity you're seeing, you don't think there will be any kind of shift?

Based on the early activity, there hasn't been much of an impact. So we'll continue to monitor it, and it's something, again, just encourage borrowers to take advantage of it if it makes sense for them.

Okay, great. Thank you.

Thank you. That concludes the question and answer session. At this time, I would like to turn the call back to Ann Arias for closing remarks.

Thanks, Abigail. We'd like to thank everyone for joining us on today's call. Please contact me if you have any other follow-up questions. This concludes today's call.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.