Q2 2019 Earnings Call
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This feature along with others allow customers to significantly reduce the interest costs of their student debt and achieve their financial goals faster.
We completed our first pass through financing this quarter, consisting of $412 million in refi loans generating a gain of $16 million or 3.9% net of capitalized origination costs.
This opens a new financing channel for the product and clearly highlights the value created by the re Fi rejuvenation business.
And our federal segment, we produced a $24 million increase in asset recovery revenue this quarter capitalizing on a large account placement.
Our performance for this client was 45% better than our competitor.
And we generated $2 billion of cash flow, including 1.3 billion from financing activities, allowing us to return $163 million to shareholders through dividends and share repurchases this quarter.
In addition to our goal of growing top line revenue from new loan originations and business processing revenue.
We're very focused on continued improvements in operating efficiency.
The result, adjusted operating expense for the quarter decreased $4 million versus the year ago quarter to 229 million.
Even as we saw significant growth in fee revenue re Fi originations.
And the launch of our in school loan product this quarter.
Our efforts this year have been focused on interest on increased automation driven by data analytics.
These efforts have also boosted customer success and satisfaction.
In addition, this quarter includes $10 million in insurance reimbursement for our regulatory related legal expense.
And we will be submitting future claims against those policies going forward.
Earlier this year, we launched our in school loan product with the goal of achieving mid to high teens return on equity.
Our product design and technology platform.
Our designed to simplify the application process and help students and families make informed financing decisions.
Features that distinguish our product from other similar products in the marketplace.
Early reviews of our product and technology have been positive.
The mailing of tuition bills, which began in mid July and we will continue into August is the main catalyst for application demand.
We're optimistic on this product and we recognize the time required to establish our earnest brand in the marketplace.
In January we outlined our key objectives for the year.
Maximize the amount and accelerate the timing of cash flows from our loan portfolios.
Continued to improve operating efficiency.
Leverage our skills and infrastructure to create value in lending and business processing.
And return any excess capital to investors.
As this quarter's results and actions indicate we are successfully delivering on these objectives.
I'd like to thank my teammates for a great quarter and I look forward to continuing success in the second half of the year.
Thank you for listening in today and I'll now turn the call over to Chris for a deeper review of the quarter, Chris. Thank you Jack and thank you to everyone on today's call for your interest in that area.
During my prepared remarks, I will review the second quarter results for 2019.
I will be referencing the earnings call presentation, which can be found on the company's website in the investors section.
Starting on slide three adjusted core EPS was 74 cents in the second quarter versus 52 cents from the year ago quarter.
Key highlights from the quarter include a 34% year over year increase in refinance loan originations at the most attractive re re fi spreads to date.
Continued improvement in credit quality.
Further optimization of our capital and financing structure.
Nearly a $1 billion reduction of unsecured debt and the return of $163 million of capital to shareholders through dividends and the repurchase of 9.6 million shares.
Let's move to segment reporting beginning with the federal education loans on slide four.
Core earnings were $131 million for the second quarter.
The net interest margin was 81 basis points in line with our guidance.
Both the delinquency and charge off rates has significantly declined from a year ago.
With the charge off rate at five basis points navios its lowest level in the last 10 years.
Contingency collections inventory increased by nearly $11 billion from the prior year.
This increase in volume resulted in a stronger than expected, 71% year over year increase in asset recovery revenue.
Now, let's turn to slide five and our consumer lending segment.
Core earnings in this segment increased 29% year over year from $66 million to $85 million this quarter.
During the quarter, we originated $846 million of education refinance loans at attractive spreads.
The total private education portfolio declined less than 4% year over year, while the net interest margin increased slightly to 322 basis points as a result of more efficient financing initiatives.
As a result of these initiatives and a favorable interest rate environment forecasted for the second half of the year, we are raising our private education loan net interest margin margin guidance to the low to mid three twentys for the full year.
Credit quality in this segment continued its strong performance as the total delinquency rate declined 15% and the forbearance rate declined 24% year over year.
Lets continue to slide six to review our business processing segment.
Total revenues in the quarter were $65 million and we continued to expand our health care RCM services by adding new full service revenue cycle clients.
We achieved EBITDA margins of 17%.
In line with our guidance and driven by disciplined cost management.
Let's turn to slide seven which highlights our financing activity.
As a result of our stronger profitability and capital position.
Naveen increased its share repurchase activity by 18% in the second quarter from the first quarter to $126 million.
We expect this accelerated share repurchase activity to continue into the third quarter.
And still expect to end the year at the high end of our targeted TNK range of 1.23 to 1.25 times.
As we continue our dialogue with the rating agencies and approach the implementation of seasonal in 2020.
We expect to be in a position to provide an estimated range of the impact of this accounting change during the third quarter's earnings call.
In the quarter, we issued $1.9 billion of term ABS and executed Navients first pass through transaction consisting of $412 million of securities backed entirely of high quality fixed rate private education refinance loans.
This transaction resulted in a gain of $16 million demonstrated the value of these assets and generated a new financing structure for the company.
In the quarter, we also reduced our unsecured debt outstanding by nearly $1 billion. This included the repurchase of 108 $30 million of yen denominated bonds, which resulted in a pre tax gain of $32 million net of terminated hedges.
This transaction was attractively priced reduce the complexity of our balance sheet improved our future profitability and retired all of our outstanding in bonds.
Moving to slide eight we remain focused on the 2019 targets outlined at the beginning of the year.
Through the first half of the year, we are on track to meet or exceed these targets.
As a result of the exceptional performance in the first half of the year.
We are raising our core earnings per share guidance to a range of $2 and 43 to $2.48, excluding regulatory and restructuring expense.
This guidance represents a 24% increase from our original 2019 guidance.
Finally, let's turn to GAAP results on slide nine.
We reported second quarter GAAP net income of $153 million or 64 cents per share compared with net income of $83 million or 31 cents per share in the second quarter of 2018.
The differences between core earnings and GAAP results are the marks related to our derivative positions and the accounting for goodwill and intangible assets with that I will now open the call for questions.
If you would like to ask a question press Star one again for a question press Star one please.
Your first question comes from the line of Sanjay Sakhrani of KBW.
Hi, Thanks for taking my questions is actually Steven Kwok filling in for sign Jay just first on the guidance Tom.
You got you raised guidance by about 33 to 35 cents relative to the prior and this quarter. There was about a 20 cents beat just was wondering if you can help us think about where the rest of the upside from is it all coming from the better.
Consumer lending NIM now or are there other factors we should consider.
Well I'd highlight a couple of things obviously the rate environment has changed dramatically over the last year and so there are benefits that were realized going into the second half of the year. We are projecting two rate cuts to happen in 2019.
Which we continue to be a beneficiary. So net interest income we believe we'll continue to perform.
We continue to have strong expectations around our fee businesses and as you saw in the quarter. It really wasn't across the board. We expect a lot of those trends to continue.
Got it and then just around the are there further opportunities for loan sales soared debt repurchases as we look into the rest of this year.
The primary purpose for us for the loan sale opportunity was a few things one from a structure perspective. It was important for us to do a transaction.
Because it will reduce the time to be able to do it. The next time and time as an important element into the actual results that you achieve in the loan sale process and so first and foremost is creating another form of financing for the company.
Obviously, we have a lot of opportunities in the market today, but inevitably we wanted to have that opportunity as well. They also was very attractive to us from a from a return perspective, obviously the loan sale is just an acceleration of future cash flows to today and so for US we saw that as a relatively attractive opportunity from a pricing perspective, we do not expect to continue to do loan sales as part of our business plan, but obviously if opportunities arose where we could achieve a very attractive returns we will take that opportunity, but we will not be putting that into our business plan going forward.
And on the debt repurchase that was a pretty unique opportunity.
I would love to see more of them, but they don't they don't show up there very often.
All right. Thanks for taking my questions.
Your next question comes from the line of Lee Cooperman of advisers.
Hi, I'm going to ask the same question I've been asking for five years.
Clearly the most aggressive use of that capital has been returning it to shareholders through repurchase.
What do you think you're buying when you retire you. She is like in the last quarter I guess should pay 13 23.
Over the history of that buyback going over the last five or six years, you probably paid on average much more than 13 23 stock had been relatively unresponsive. What is it that you know to me buying back stock is justified on the one scenario you're buying back something that is undervalued relative to what your expectations are can you share with us kind of what you're thinking about the value of the business.
Sure. Thanks. Thanks. Thanks for your question Lee I mean, we are we continue to believe that returning capital through share repurchases as an attractive transaction for our investors.
Then the last.
18 months, we have repurchased almost a little over 36 million shares.
The average price has been somewhere around 12, and a half dollars a share during that timeframe a year to date. It's 12 24. So when we look at the value that we can deliver from the legacy portfolio.
The additions that we think we can add to value from loan originations in our in our business processing areas.
We think were buying the shares back at a substantial discount to the intrinsic value.
Of the company and that's been consistent with our approach.
Obviously, the VAT the purchase prices in the last 18 months have been.
More attractive than in prior years, and we accelerated the share repurchases on the second quarter, reflecting that that point of view.
The 207 million that you have left is the intention to use it this year and.
If you had to make a preliminary estimate about what kind of capital that was available in 20.
20.
What would you say.
So we do plan on completing.
The repurchases with the remaining authority this year.
And that ultimately the amount that we repurchase next year is a combination of our forecasts and board a board discussion process that will be happening later this year.
I assume order of magnitude will be at least 10%.
Well I don't want to get ahead of the just the board process, but I mean, you can look at what the cash flows are in the capital generation.
Yes, nothing would you wouldn't see material changes year to year and that kind of activity and clearly your preference would be to put the excess cash flow into repurchase rather than raising the dividend at this point.
Yes.
Okay. Thank you.
You're welcome. Thanks, Thanks for your participation.
Your next question comes from the line of John Hecht of Jefferies.
Good morning, Thanks, very much the first question just on the quarter the.
Expenses I know you had the approximately 6 million from the proxy.
Resolution.
But there was a 5 million from a transaction or transition service agreement I'm just wondering what is that.
Yes. So that is the agreement you may remember the first data outsourcing transaction, we did where we have revenue and expenses offsetting each other so it really is a wash, but as part of our agreement as we trend as we transition services away from our platform to that they are taking over.
It really has zero impact on the bottom line.
Yep Yep, I remember that now and then.
I Wonder can you give a sense for you.
Given the kind of forward curve.
And what's going to change any you guys have done a lot of hedging in your in your margin, but what kind of opportunities at a lower rate.
Environment going forward might present for you.
So first on the hedging point the you know the rate environment really isn't the impact of that to the hedges you just remember really hedging or ones threes risk and so what we've done is really neutralize that risk and provided certainty. There are times that outperforms at times and Underperforms, but are really does just provide certainty to our cash flows of the rising or declining rate environment. What we really try to do is lock in.
12 months out really what the portfolio needs to be hedged that so less of an impact there, but where we can pick up some value in the rate environment. We're in today, which is a declining rate environment as a few things one obviously floor income becomes a little more important as rates decline and we pick up some.
Margin there. It's also important to note that while we are fairly well match funded from an asset liability perspective in a stable or declining rate environment. There are short term benefits as as those rates move that in or to our net interest income and we're experiencing those benefits. Currently so if the rate environment continues we should see that flow through so in the third and fourth quarter as we could see improvements in net interest income and also floor income benefits as well if we see the rate cuts expected.
Great. Thanks very much.
Your next question comes from the line of Rick Shane Jpmorgan.
Hey, guys. Thanks for taking my questions. This morning.
Look you guys have a steady.
Oh sort of wall maturities are steady line of maturities coming forward and you've done a good job every.
Europe sort of knocking them down in advance.
2000, 22.1 billion 2021, you have 1.4 billion.
I'm, assuming as we move into the second half of the year, you're going to start to address those 2020 maturities.
Im curious when you look at where rates are today, if there's opportunity to benefit from lower rates are.
How how those maturities are addressing those maturities are going to impact margin over the next couple of years.
So so it's a great question, obviously 2020 represents the last maturity at maturity over 2 billion.
Ed four and take a look at the liquidity in our balance sheet. Today, we have over 1.7 billion of cash we have unencumbered assets in meetings and meaningful scale. So we feel very good about our ability to address 2020 and going forward. What we're really focused on is the continued optimization of our balance sheet. So looking for opportunities to finance assets at attractive rates versus where the the unsecured market may be.
Also doing medical costs potentially so we are continuing to review and analyze our position and optimize the outcome for shareholders and that is the exercise we're engaging on but the the opportunities clearly are there.
And we will focus on them in the second half of the year.
Okay, great and.
Look given the strength of the earnings you guys have a variety of options buying back shares meeting maturities.
Uh huh.
Acquisition I am curious when you as a management team sit down and look at the profitability that you're enjoying today.
And think about redeploying some of that profitability in Q organic opportunities.
Where do you see the best.
Place to deploy capital.
So when we look at the business outlook here in a combination of the things that you mentioned, we actually think we have the ability to do multiple.
Multiple things simultaneously that includes growing the business organically, how you see that in the 34% increase in refi originations the launch of our in school loan product.
You know our business processing area has less of a capital.
On the demand side of the equation to grow that business.
But nonetheless, we still see an opportunity to really leverage the infrastructure and the operating skills or the company there.
We as Chris mentioned, we have significant cash flow and cash resources on hand to meet our our liabilities and our maturities there.
You start this year to date with reduced our unsecured debt balance by a billion dollars.
While adding to our cash position and returning.
Excess capital to shareholders.
All three of those things organic growth.
Debt reduction unsecured debt reduction and capital return are on the table and we see the ability to kind of manage through those.
Various very effectively.
At the end of the day, if we add our if that the best use of capital is if we can redeploy it for shareholders and investors at higher returns and they can get elsewhere. That's obviously, what we would love to be able to do and.
In our case, because our capital generation is so high we're actually able to do all three things.
Great. Thank you guys.
And your next question comes from the line of Moshe Orenbuch of Credit Suisse.
Great. Thanks, and yes, I guess, Jack congratulations on being able to drive that to you in a ratio to better. Thanks.
Better than your expectations I was wondering if you could just kind of talk a little bit about.
One.
What were the major factors in how you get there.
Hi, how youre going to use that excess.
Kind of Dovetailing, perhaps Rick's question as you look out into 2020.
You know are there steps to actually to study.
So thats a great question appreciate it a couple of things one obviously the the DNA ratio guidance. We gave was first end of your guidance. So we do expect end up in the higher end of the 1.23 to 1.25 times. We clearly are above that at 1.27 times. Some of that was driven by the benefits we saw from the buyback the debt buyback and the loan sale.
But inevitably clearly in a very strong position from a capital perspective, and what you saw US do is once we realize that the early in this quarter as we accelerated our share repurchase activity to try to catch up a little bit on that and as I mentioned in my remarks, we will continue the same pace. We saw in the second quarter for the third quarter. So those are the dollar numbers should be relatively similar and that's what we'll shoot for.
You know inevitably the big thing is you are all aware is the implementation of Cecil coming we are finalizing our our views on the impact of capital and how we manage through that.
We feel good about our position today, we feel you know we put ourselves in this capital position over the last year to be able to successfully manage through that and so we will be giving you some pretty clear update and guidance in the third quarter to to help you see through the impact and how we're managing capital, but we clearly feel good and we accelerated our share repurchase activity to be able to manage that capital position, where we are today, because clearly we did a little better than we were expecting.
Got it thanks, and just on a second topic.
You obviously it had.
Strong success relative to peers service endpoint I'm, just wondering if theres any thought.
From a longer term perspective given that.
That is still.
You know kind of thinking about how that okay.
Dennis contract look longer term kind of any big picture thoughts there as to how you could.
Leverage that perhaps but use it also in a way that.
As you can.
Manager.
So on the one of the.
Larger skills of this company is our operational expertise and.
And particularly how we execute that and loan servicing.
It comes in a variety the benefits come to to us on a variety of ways, we're very analytical and data driven in our process that allows us to be.
Very specific it at how we assess individual customers you see it in our delinquency and default rates are the federal cohort default rate, which is a uniform measure our federal loan performance.
Across.
All schools, we consistently deliver 30 plus percent better results and all the other servicers around.
We don't have a different portfolio. These are measures that you could look at individual schools or across the entire platform.
That's a skill set that we think is valuable to the department of Ed.
How.
How they utilize that and execute that will be really.
Dependent on how the RFP form.
Gets issued and how it gets executed so those are things that have changed around quite a bit over the last couple of years.
Is that our pea that we're in the process of responding to now for.
For the back office and call center related functions, and we hope to be able to demonstrate our expertise and the value that we generate versus just a commodity type.
Service.
The last piece I would just add to that is that the regulatory environment associated with that business.
Is that.
It is a challenge.
And it's something that needs to be addressed.
As the Ed.
To make that contract in that kind of business attractive and profitable.
Okay.
I I I guess, you know I'm sure [laughter] to think about you know Jay Jackie kind of less than hanging a little bit at the end there.
I mean any anything to report with respect to your.
Discussions with the regulator on that.
So you know it's I think we've made on the regulatory side of the equation there have been a number of.
Unsubstantiated accusations that had been made about the work that we do I mean, if you look at the sea of PB.
Claim when they filed their lawsuit more than two years ago. It was that we were.
Steering hundreds of thousands of borrowers unnecessarily into forbearance, we've now been through two years of fact discovery and the CFPB has yet to find a single customer to support their claim.
I think that set us apart.
That fact pattern speaks volumes about the situation and the regulatory environment and where we stand.
Thanks.
And again to ask a question press Star online.
And your next question comes from the line of Alan I think on a big city.
Thanks, So just wondering how the lower rate environment.
Should impact your re Fi originations going forward as that make it more challenging or create an opportunity from a financing side.
To do more of that.
So the lower rates I mean, basically the I mean, the re Fi business is a product that helps customers, who have higher coupon student loans and establish credit record and sufficient cash flow to be able to easily service those accounts to refinance those loans at a lower rate save money and pay down their debt faster. So a falling interest rate environment is is marginally improves demand for that product.
Overall, so thats, where as a rising rate environment marginally reduces demand for the product, but it's all it's really the absolute differences between the coupons on their original student loan debt versus the current market rates that are available to them.
Okay. The I guess, the new plus originations from this current academic year will be.
At lower rates because of where the tenure was.
I would imagine that they are lower although they are still grad plus interest rates in todays in today's rate environment, we would be able to refinance those loans at a lower rate than what the the borrowers paying on a new.
Grad plus loan.
Obviously, depending on their credit situation.
Okay.
And then the.
On the in school piece I know, it's quite early days for that but.
Is there anything that would.
Indicate that you'll be able to do more or less than what your original expectations from.
So the the process the demand our students and families begin to apply for loans once their tuition bills are received.
And those really.
The the early schools start sending them in kind of mid just in the last couple of weeks and then the.
The volume of that process accelerate into August .
So we're just starting to see kind of application flows associated with that.
You know the the increases.
The percentage increases or kind of what we would expect to see at this stage in the game, but it is still very early in the process.
Okay, and then just lastly, the the.
Federal segment collection and asset recovery have been quite strong recently is that something that you expect to be able to continue for a while with with.
The tail on on the ability to continue to generate.
Stronger collection rates.
Our competitors and ourselves are pricing that product relative to the general interest rate environment. We think are advantages in that space come from the way. Our product is designed in featured for our customers. It allows them to select and manage.
The monthly payment process to fit their budget, which allows them to save more funds over time and chief financial goals faster.
Our cost of acquisition is also significant advantage for US we are principally a digital shop, meaning that we are originating this generating leads.
Through a digital process, rather than a direct mail process and as a result of that and the.
Technology, we deployed to to underwrite the loans our cost of acquiring alone is is our in our estimate about half the industry average. So when you combine those features together we think we've got a a very attractive products at.
Obviously, you saw it in the past through transaction that we did generating a gain of 3.9% net of of capitalized costs is you know given the credit quality. This portfolio shows the the value that we can generate from the rifai origination business.
Thanks, Jack and then switching the credit ratings.
And notice your goal is to maintain your current credit ratings and then a few months ago <unk> had moved to a negative outlook wondering if you guys have done anything over the past couple of months to mitigate or how many conversations about getting an outlet taken off negative.
Oh I can say, if we continue to execute on on our plan a and continued to achieve the their concerns are in that one they that if you look about their primary concerns has been focused on the majority <unk>, we've been taking care of those without any issue in our liquidity position should give them a lot of comfort.
They have had regulatory concerns and I you know I think as every day goes by in his Jack mentioned sort of the the lack of evidence they get a little more comfortable with that aspect of though remains an unknown and from a business plan perspective, our execution has been better than expectations. The earnest.
You know builds.
So I think all we do is executed next few well and as you said, we do want to maintain our ratings and so we will see where fitch ends up but.
We do seem to be addressing their issues and so we'll just have to see whether the you know what what the ultimate goal is.
I I would just add to that as we have consistently delivered on every aspect of the capital in debt financing.
Forecast that we have proof it presented to the rating agencies.
In the way, we have managed to our liability structure through <unk> very challenging environments, and the recession, great recession, and some of the liquidity issues as a associated after that.
You know I mean, the end of the day here is is is we have outperformed r. rating.
And every single period.
And our ratios show that I mean, I think most people would admit that.
<unk> not reflect were ratios or or capital structure is.
And we continue to push on most points whenever we need with them.
[laughter].
Got it and thanks, Jack christened Joe.
Better margins.
The revenue is.
Is better.
And as you point out the interest rate environment is helping moss on our legacy portfolio. Both in terms of floor income and the and the prime lie bore related issues.
We're also benefiting from improving credit we saw significant delinquent double digit delinquencies declines.
In both our Feldman private portfolios, that's leading to.
Lower provisions.
And are on the operating expense side of the equation, we continue to deliver efficiency gains.
And how we run and operate the business.
When you combine that with a lower share count that is what's driving.
The earnings momentum of the company. So I I think it's important to know that it's coming from across the board contributions versus just a single area.
And then maybe koresh you want out of a little bit more about what a 25 basis point cut would mean, yeah. So ask for more costs, obviously, it really depends on timing.
Data the fed meetings are important where the market expects to be what happens to lie bore and financing costs. So it's not as straightforward as I mentioned, we do have to re cuts in are forecast one for July and one for October another rate cut.
Expectation clearly would be beneficial, but it depends on you know timing of when it happened when the market would think it would happen.
It's all I can say it could it would be beneficial it's just difficult to quantify given our expectations for two and a third was coming it would probably be a year end and.
So it's just a a little more opaque from that perspective.
Okay and as far as you know extracting additional funding efficiency is how much how much more opportunities there for for you and and how active should we expect you to be.
And the coming corridors.
I you know I think that there is a lot of opportunity and obviously, we continually assess the costs of our financing that term over financing the cash flow expectations that we expect to realize over the coming years and weigh them against each other.
You know we have still.
$8 billion of Overcollateralization. There are other opportunities we have on unencumbered assets on the balance sheet.
So I think you know our perspective is we continue to push on those opportunities I can tell you. The financing markets are very healthy we continue to get a reverse inquiry into those opportunities.
So so you should expect discontinued away those benefits and make you know optimal capital structure decisions.
You know the only thing on highlight is 10 years, obviously important as well and so we way all those factors.
Thank you.
Your next question comes from the line of <unk>.
Hello, everyone. Thanks for taking my call.
Just wanted to see if you could comment on I notice that the legacy private loan book seems to advertise a little bit more this quarter could you kind of comment on why that might be you know is it kind of just reflection of.
The economy and people refinance.
Or is there something else going on that I should think about.
Yeah, you know our expectation from our from our models perspective, our expectation that actually was relatively in line from what we were expecting and so again a mature for your expectations were we haven't seen outside of them are station versus our plan in fact, I'd say you're today, we're actually probably a little better than we would've thought on on where balances are ending up.
So again I'm just not sure what your expectation was but ours are relatively in line to even slightly better than expected.
Just you know given the new loan generation it.
Kind of <unk>, how do you think about the timing of when.
The loan at least on the private side, the loan book, which stayed alive.
Is that something it's a great question as I mentioned that no as I mentioned in my remarks, and always 4% year over year decline. That's continue to come in we obviously are I've seen rifai originations be better than our expectations that you know the best spreads we've seen them. We continue to see a lot of opportunity. There obviously on a risk adjusted basis, we really liked those loans from a from a return perspective against the capital we've put against them and so I would say that were you know that we're getting closer to that position, but we don't have a forecast it when when the private portfolio will stabilizing grow but we clearly are we like what we're seeing those four.
Great and maybe you know there's been a lot of the.
Proposals out there by the new candidates that are coming out a lot of it is known as a lot of the headlines, but maybe if you could just kind of anything that stands out that you think is particularly interesting or heads.
Potential traction on your side that you think is important to maybe.
Call out or highlight anything.
In general.
I think as you as you noted there are a lot of proposals and.
Surroundings student debt given the election cycle.
You know at this stage in the game you know those are their proposals at this at this point and you know how the government and taxpayers decide to assist students and families and and paying for college is really a political decision.
So we'll have to wait and see how that all unfolds.
Totally understand it maybe just my final question, just maybe could you refresh department education servicing contract to spend a lot of.
Stops and starts maybe what is the timeline for conclusion of that.
Or anything in particular, you could update us with so.
The <unk>. The current state is that the contract has been kind of segmented into different components that are out for our R.P.
You know we would.
<unk> their expectations had been that the decisions would have been made by now by various components are still out for a response to our peace and others that have been issued have not been concluded yet.
It's it's it's really difficult to say exactly how this is going to go in part because every single action seems to be.
Accompanied by some form of big protest by by somebody in the in the industry and we certainly would expect that protests.
That bid protest process to continue.
Even if even as decisions are made and contracts awarded in our current contract was extended through December . So we'll see what happens when we get to December but that was an ex bad a one six month extension.
If they wanted to choose the to to implement which they did and so again.
Per Jack's comment that could continue to be extended it's unclear, but we are I've been extended through December .
Great well fed thanks for the update.
Welcome.
And they're not part of the question is that this time now trying to call back over to Mr. Joe Fisher.
Okay. Thank you Felicia.
I'd like to thank everyone for joining us on today's call. Please contact me, where my colleague Nathan Rutledge. If you have any other follow up questions. This concludes today's call.
And thank you for participating you may now disconnect at this time.