Can Navient's Cost-Cutting Strategy Set the Stage for Profitability?

These restructuring efforts have helped reduce the company’s expense base. Over the five years ended 2025, total expenses declined at a compound annual growth rate (CAGR) of 15%. Navient exceeded its $400 million expense-reduction target by December 2025 and generated an additional $21 million in savings during the first half of 2026. Management remains on track to keep full-year operating expenses at $350 million or lower.

The company is also taking steps to improve capital and operating efficiency by reducing its exposure to legacy assets. NAVI classified $528 million of legacy private loans as held for sale in the second quarter and may classify additional portions of its $5.4 billion legacy portfolio for sale. Reducing these non-strategic assets could lower the resources required to manage the legacy portfolio, thereby reducing operating costs further.

With a significantly leaner cost structure, Navient is better positioned to improve profitability. Continued cost discipline and efforts to streamline the legacy portfolio could further improve operating efficiency and strengthen its profitability.

How Other Financial Firms Are Reducing Expenses

Similar to NAVI, other financial firms like Citigroup Inc. C and Wells Fargo & Company WFC are also streamlining operations and managing expenses to improve returns.

Citigroup is streamlining operations by exiting non-core international consumer businesses. The sale of its Polish business in June 2026 marked the final international consumer divestiture, excluding the Banamex wind-down. C also sold an additional 22.6% Banamex stake in the second quarter. These moves could reduce complexity and free up capital, although operating expenses rose 6% year over year in the first half of 2026.

Similarly, Wells Fargo continues to improve efficiency through branch optimization and workforce reductions, although non-interest expenses increased 3% year over year in the first half of 2025. As of the second quarter of 2026, its branch count declined 1.3% year over year to 4,079, while headcount fell 7.2% to nearly 197,500, marking the 24th consecutive quarter of workforce reductions. These efforts are expected to support WFC’s profitability.

Navient’s Price Performance & Zacks Rank

The company’s shares have lost 4% in the past six months against the industry’s growth of 8.3%.

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Currently, NAVI carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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