Navient (NAVI): Assessing Valuation After Student Loan Forgiveness Policy Shift

The Trump administration’s decision to reinstate student loan forgiveness for over 2.5 million borrowers has brought Navient (NAVI) into focus. This policy shift may influence the company’s loan servicing operations and future revenue streams.

See our latest analysis for Navient.

Navient’s share price is currently sitting at $12.82, having edged up 1.02% over the last day and climbing 5.17% for the week as the market absorbed the policy news and its potential sector ripple effects. While the short-term share price returns have perked up in the wake of recent events, the company’s one-year total shareholder return stands at -11.19%. This suggests that momentum is still rebuilding after a challenging stretch.

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With positive momentum showing up in Navient’s short-term share performance but long-term returns lagging, investors are left asking whether the recent rebound signals the stock is undervalued or if future growth is already priced in.

Most Popular Narrative: 9.1% Undervalued

Navient’s current price of $12.82 sits below the most-watched fair value estimate of $14.10. This has sparked debate over whether the current rally has further room to run or is already baked into consensus expectations.

The elimination of the federal Grad PLUS program and increased federal lending caps are expected to substantially expand the demand for private in-school graduate loans. With Navient already holding a strong position in this segment (approximately 20% market share), this structural shift could drive significant, sustained origination growth and materially increase future revenues.

Read the complete narrative.

Why are analysts willing to put a premium on Navient despite sluggish recent returns? Their fair value hinges on an aggressive shift in graduate loan demand, sharper margins, and a future profit multiple more conservative than today's. Think you know what propels this forecast? Get the full story behind these bold projections and the surprising assumptions driving consensus.

Result: Fair Value of $14.10 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, rising credit risk and persistent regulatory changes could threaten Navient’s earnings outlook. These factors may also disrupt its anticipated growth trajectory in the coming years.

Find out about the key risks to this Navient narrative.

Another View: Multiples Tell a Different Story

When we look at Navient through the lens of its price-to-earnings ratio, things get interesting. The company's ratio sits at 38.6x, which is much higher than the US Consumer Finance industry average of 10.3x and also above the calculated fair ratio of 31.5x. This premium suggests the market could be overestimating Navient’s future earnings potential. Are investors taking on more risk than they realize, or is there something the numbers are missing?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Navient Narrative

If you see things differently or want to dig into the details yourself, you can put together your own narrative in just a few minutes. So why not Do it your way

A great starting point for your Navient research is our analysis highlighting 1 key reward and 4 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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