SLM Corporation (SLM) Earnings Call Transcript & Summary

Good morning. Thank you all for joining us. I'm very pleased to have Jon Witter, the CEO of SLM Corp join us for a fireside chat. So before the [ talk ], we're going to do [indiscernible] the third question -- and then we'll go halfway in -- we've got a [ mod ] response question those of you out there, and then I'll open it up to the audience for some questions.

So waiting on off, Jon, the third quarter is a busy time for Sallie Mae. How has the in-school origination market been shaping up during the [indiscernible]?

Yes, Mark. It's great to be here. Thanks, everyone. And a quick context, we have really fortunate to compete in [indiscernible] think a really attractive market a normal year, you can count on the origination growth in our market in the mid-to upper single digits. In that context, we're very encouraged by what we're seeing this year. We've seen year-to-date, year-over-year application growth of about 13.6%. We've seen disbursement growth of about 10.6%. And all of that is very consistent with the updated and increased guidance that we gave on the last quarterly call of 9% to 11% origination growth for the year. I think in addition to the numbers, which again we're really happy about, we also like a few things that are going on. So the mix of customers is a really attractive mix of customers. It is more freshmen. It is more new to firm customers. And that's important for us because they tend to have greater lifetime value to us and a greater serialization rate. So that helps our origination goals and opportunities in out-years. I'd also say that is in part, we think, a reflection of just what's going on in the industry, a return to normalcy in the higher education market. We also think it's a little bit indicative of the investments we've made in our marketing capabilities over the last couple of years. So we've invested significantly in our March capabilities, but we've also invested significantly in things like our Nitro acquisition, which we think attracts a younger set of customers. So we like all of that. And I think maybe the most important thing of my CFO over here, we've done all of that while continuing to be very disciplined on our CTA guidepost and metrics. And so we like the volume, we like the [indiscernible].

Is there anything you're seeing is notably different around demand, competition or credit quality on [indiscernible] over the past years?

Yes. Let me hit quickly what I think is the same. And then I'll talk about a few things that are on the very margin different. But I think the takeaway here is it's pretty similar. First of all, credit quality, I think, is plus or minus, very small margins there, highly consistent with what we've seen in last year. And that's obviously something that in these uncertain economic times, we spend a lot of time looking at. But if you look at cosigner rights, FICO scores, all of those traditional types of measures very, very [ important ]. As we've talked about on the last couple of earnings calls, I think we've seen as may be the case in many other industries, a slight uptick over the course of the last year or so in competition around paid search. That is getting to be a little bit more of a competitive channel for us. We're fortunate in that we have lots of channels other than page search. It will always be a part of what we do. But if you think about our preferred lender list, we're on, gosh, just about every preferred lender list out there. We have a huge marketing capability tied to our brand and the content that we provide to customers and prospects. So we're not as reliant on paid search as we might otherwise be, but we've seen a little bit of an uptick there, and we'll continue to watch that flows. And I think the only other thing that's worth mentioning, and I view this more environmental, we absolutely saw what I'd call a catch-up game when it came to pricing this fall in light of the very volatile rates market that we saw. And I think we saw pretty rational pricing as the rates markets moved all over the place. But as you can imagine, competitors can't change their price literally hour by hour, day by day. And so there were times when rates run up that we had concerns about margins standing out a little bit. I think ultimately, we were very disciplined and are very happy with the pricing at which we originated, but a little bit of pricing volatility as well given the underlying rates markets.

Okay. That's helpful. And sticking with competition, there have been a couple of new entrants into the [ inflow ] market over the last few years. But your market share has not really been impacted. Can you give an update on your market share and talk about your competitive advantages that enable you to maintain a high share?

Yes, sure. So first of all, out of apologies, we're a quarter or so behind on market share. That's not because we don't care about it, but literally, the company that we use that provides us that data has recently changed hands and they've been slow to get us some of the data, but we hope to be caught up on our market share analysis here soon. We are advantaged in that we have a very high mid-50s, low to mid-50s percent market share depending on the quarter. We feel good about that since I joined the company as CEO a couple of years ago. We have pretty consistently grown or maintained that market share. And I think at the core of that is really just the strength of our franchise and the scale of our franchise. If you just go through the numbers, our balance sheet every year generates about $1.5 billion of NII. As I mentioned before, we're on the preferred lender list of just about every school that's out there. We have a brand that is synonymous with the category. We tightly manage expenses, and we've invested in automation and technology that allows us to grow effectively to scale. And so when you put all of that together, that's a great foundation to grow and invest from. And I think that's allowed us to do a couple of things. One, we've been able to invest, as I mentioned earlier, very aggressively in our marketing capabilities. That's both the technology behind our marketing. But also, what we're really seeing is the incredible power of content-based marketing and relationship-based marketing that was a big driver of our acquisition of Nitro a couple of quarters ago. So we can invest very heavily in marketing. The second thing is we can continue to invest in the resiliency and the automation and the scalability of our cost structure. So we have about a 60% fixed cost structure today that allows us to grow very profitably versus folks who are much more variable in the overall cost structure. And I think the third thing is it allows us to invest in the overall customer experience. So whether that's taking noise and friction out of the application, improving our service environment. And we see that in operational metrics like how long it takes the customer to fill out an application and what the yield rate is on those applications. But we also see it in things like improving net promoter score. So it all starts from a very strong, I think, foundation and a very privileged position that we have in the marketplace. And then we try to use that advantage to invest smartly on top of that.

Okay. Great. Can you comment on the consolidation players and the trends you're seeing? And what's the outlook for that? The product work in today's rate environment?

Yes. And look, I am sure there will be folks at this conference who know a lot more about the ins and outs of the consolidation business than I do. It's not a core part of our business, but we obviously have a view on it because when people consolidate largely their federal loans, sometimes, obviously, they're consolidating their private loans as well. I think what we've seen is a pretty dramatic change in this market over the course of the last couple of months. So third quarter, July and August, we've seen a reduction in consolidation activity by about 23.6%. So fairly significant. That's off of a slight increase in the first half of the year really coming out of what we believe was a normalization post-COVID. And when you get into the numbers, and again, these are our numbers and we're not in the business, but we've done some back-of-the-envelope calculations. If you look at just what's happened to credit spreads and rates, the implied cost of funds for a lot of these consolidators is probably rough justice in the 5% range. If you look at recent transactions, the weighted average coupon is probably more in the 4% range. So I wouldn't write those numbers down in ink. Again, those are outside numbers from someone who's not forge to the business. But I think it modeled for us just what we think is the stress that, that business is under. So we expect that the rate environment will be helpful to us in our portfolio and probably stem the level of consolidation going forward and look forward to serving those customers longer.

Okay. Great. Turning to credit. You recently increased your full-year guide for net charge-offs this year. After having very strong credit in the last 2 years, it came as a bit of a surprise. The driver of that is a bit nuanced, especially for those who don't follow student [indiscernible] about that?

Yes. Happy to. And let me maybe take a step back just to make sure everyone walks into this discussion with the right side of expectations. So we underwrite to what we think is going to be about a 10.5% lifetime loss rate on our loans. And that lifetime loss rate has ticked up modestly over the last couple of years. I think we've talked pretty extensively about new credit administration policies, changes to our forbearance practices that we put in place. We actually increased our CECL reserve over the last 2 or 3 years by about $150 million to offset that. So that lifetime loss number has ticked up modestly, but it is entirely [indiscernible]. Also, it is entirely consistent with the 20-plus percent ROEs that we've seen pretty consistently for all of our origination vintages over time. So I think the first thing I want to do is give everyone that data. If you assume a 6-year average life of loan, that 10.5% number, just quick math, works out to be about a 1.75% average annual charge-off rate during that P&I period. Now, that's a vintage view. And obviously, the vintage is not a straight linear view. There's fewer charge-offs when someone in school. We know when they get out of school, charge-offs, they're a little bit higher for a period of time. We know they really fall off as that portfolio becomes more seasoned. That's just the normal adulting process. If you think about a 21-year-old getting out of college, starting their life. That's just the way it works. And then I think really noteworthy for us is that vintage view takes on different forms with the portfolio. [ SML ] is very much growing and maturing our portfolio over the last couple of years. So rates have been a little bit lower as more students have been in school and so forth. But I think over the last year or so, we're starting to move into a much more mature stance in terms of our portfolio. And we would expect that for that portfolio performance would more closely approximate the average lifetime performance in any given year. So again, just take that as a context. Now this year, we're guiding to about 2.3%, not 1.75% charge-offs. And so that's obviously high. There's 3 things. We talked about all of these on the last call, but let me go into a little bit more detail on this. The first and I think sort of the most significant and the easiest to get your head around is what we call this gap year population. So every year, it doesn't matter. Every year, we have a group of students who drop out of college. And they entered P&I without the benefit of a college education. And they are not surprisingly among our [ performance ] cohorts because they've dropped out and they still have debt, but they don't have the degree and the underlying weight go on with it. In 2022, we effectively had 2 of those populations. Our normal 22 dropout population, but we also had effectively what we call this gap year population, which was the dropout population in 2020. And during the pandemic, we made the decision because we weren't sure how quickly people were in the back to school and there's real benefits that a student loses if they go into P&I and then ultimately decide to go back to school later. So we made the programmatic decision to give those people longer before they went back into P&I, went into P&I. So this year, we effectively ended up with 2 of those populations. So 2 of the worst performing population. On top of that, what we saw is that the gap year population, this 2021 dropout population is performing materially worse than a normal dropout population would. And again, we were -- to put it out there, we were surprised by that from an overall credit attribute perspective. They look a lot like a normal drop at population. They are just performing worse than a normal population would. And to a certain extent, that makes sense. I think the risk splitter called “I dropped out of school during COVID” is probably a pretty powerful for this quarter, and we're seeing that in the performance. It's important to note that this is a defined [ fined ] population. We know every single customer in this cohort by name. We know who they are. It's not an amorphous part of our portfolio that we're tracking. And so we can track their specific performance and understand that. The second thing that we talked about in the last call driving it is the changes to our credit administration or our forbearance practices. And again, I think we've talked about those pretty extensively and reserved for those. And what I think we're seeing here, we believe, is a slightly faster trip for customers to default to our not benefiting any longer from the more ready access to that forbearance program. So they're working through the system a little bit faster than what we had modeled. And then the third thing that we talked about on the call is we entered the year a little bit behind on staffing given the great resignation. And these 2 volume events put us from it being a nuisance to it being something that required more stronger response. So we have staffed up aggressively. We have corrected that problem, but there is no doubt that part of the results was us being less fully staffed than we would have liked to have been in the early part of the year on that [ volume ].

Okay. That's very helpful. Any color you can give us on what you're seeing so far and review on [ current ] trends on credit still in line with your new guidance?

Yes. And I would say, just in service to our Head of Investor Relations, we did put out a paid a couple of pages this morning. One of them is reaffirming the guidance that we laid out in the second quarter call. So if you haven't seen that, I think, I'm looking at Brian now, he's nodding, I think that, that has gone out and it's publicly available out there. So we're seeing trends that I think are highly indicative of the things that we thought we would see when we put out our guidance. To touch on a few, and I think this may also touch on not just this year, but future year's outlook. Number one, we are seeing a real normalization of this gap year population, especially the customers that entered P&I sooner. They are really starting to act a lot like a normal gap year population. So they were higher losses in the early months, but they've really normalized. And so we feel very, very good about that trend. I think the second thing that we're seeing, which is worth noting is that our normal 2022 dropout population is actually acting a lot like our 2019 population, especially when you adjust for the credit administration practices that I've talked about. So that doesn't look like the 2021 gap population, that looks much more like a normal population, and we feel good about that. And we mentioned this briefly on the last call, but we also did a bunch of pretty extensive analyses as we would always do on the rest of our portfolio. And what we've found is if you look at refreshed FICO scores, payment performance for fixed versus variable rate customers, all of the normal credit splitting metrics, what we're seeing is very little change in the core base portfolio at this point. So we're feeling really pretty good for where we are, recognizing it's an uncertain economic environment right now, and you've got half the world predicting a great recession and half the world predicting a soft landing. So in light of all that, we feel good about the trends that we're seeing and certainly feel comfortable reaffirming the guidance that we've given already.

Okay. Great. And you effectively just answered my next question. But just to clarify, I mean, it sounds like the question is about 2023 credit. It sounds like a lot of the things in 2Q when you talked about the time being more temporary should fade. So should we think of 2023 as reverting to that long-term 175 basis points annualized normalized target that...

Yes, I think that is why or part of the reason why I want to spend the time really walking through the logic behind that normalized through the cycle loss rate. I think that is the right starting point. And then what I would encourage folks to do is overlay whatever economic view, your house or your shop or your judgment tells you we should overlay on top of that. And I think it's probably too early for us to be announcing official guidance in that regard, but that's the exact same thought process that we could get. We would take that 1.75% and then our view of what within the macroeconomic environment is going to look like and would expect to share that guidance on or about the time that we do our fourth quarter call.

Okay. That's very helpful. Let's see. Just switching gears, I want to talk about the loan sale environment. You have plans to sell another $1 billion this year. How is demand and pricing shaping up? And what impact does the current rate environment have on the premium?

Yes. So again, in the 8-K, I think we put out a few details on this. We have a signed sale agreement. We've not yet closed the sale but have a signed agreement to sell the last $1 billion [indiscernible] with our plan for the year. As always, we don't devote specific pricing for a little while after that, given our partners and counterparties a chance to do what they need to do. But the pricing was certainly well within and towards the upper range of what we had modeled into our overall guidance for the year, not so much above that we wanted to change our EPS guidance, but we thought it was comfortably within the range that we laid out. To give you a little bit of color, we were pleased with the response that we got when we went to market. We had a number of really good blue chip qualified folks show up who have always shown up, and we had a number of really qualified blue-chip names show up who hadn't previously shown up. And we got that sale done during what was unquestionably a really tumultuous time in the overall capital markets. And if you think about our loan sales, there's really 3 things that drive the premium we get. Number one is rates, and that's especially true on the fixed rate portion of what we sell. And so that's a very mathematical effect, and I think we all get and understand that. The second is credit spreads, which had blown out during all of this turmoil, and we think are showing nice signs of beginning to normalize. And then the third is the appetite for the residual portion given that most of our buyers securitize or otherwise productize the loans, what's the demand for that residual portion. And that's really a proxy for how risk on the appetite is in the marketplace. And so all of those definitely took somewhat of a hit during this economic [ parfocal ] that we've been in. But I think we're encouraged that we're seeing early signs of those beginning to normalize. And look, we love our strategy of selling loans and buying back undervalued shares. I think that's a strategy that we'll look to continue as long as the economics make sense.

Okay. Great. I just want to pause here and ask a few questions in the audience, if you'd be willing to participate and grab the controls in front of you, we've got 3 or 4 prepared questions if we can queue those up. What do you view as the biggest catalyst for SLM over the next year? One, increasing private student loan market share; two, better-than-expected gain on sale margin; three, better than expected private student loan credit or upsides in the NIM or by others? So 53% indicated better-than-expected private student loan credit. Next question, please. What do you view as the biggest risk to shares? One, increasing third-party consolidation; two, worse-than-expected credit; three, lower gain on sale margin on loan sales; four, expansion to other products by other? Yes, and consistent with the prior one, 83% worse-than-expected credit. Okay. Next question. Where do you see gain on sale premium in the second half? 0% to 2.5%, 2.6% to 5%, 5.1% to 7.5%, 7.5% to 10% or above 10%? 42% 2.6% to 5. Do we have one more? Over the next year, would you expect to position SLM to, one, increase; two, decrease; or three, remain the same? Pretty balanced, a 40% increase versus 13% to decrease. So thank you all for participating in that. I want to open it up to the audience for questions if you have any thoughts. I've got more prepared than I can ask. Anyone? Okay. Well, feel free to raise your hand later [indiscernible]. This is not a typical. Okay. Let's see. Sticking with the loan sale topic, going forward, does it still make sense to continue loan sale and buyback program?

Yes. Look, I'm not ever going to say never, but I think this is a case where I'd be as comfortable as they ever would think, yes, I think it makes sense, especially given the environment that we see in front of us. Let me clarify and build that out a little bit. First of all, and I've said this in a number of occasions, my management team, my Board and I, we worshipped at the altar of capital allocation and capital returns. We think it is an incredibly important thing in terms of showing discipline to our investors. We think that we've got a great opportunity to have a franchise that produces capital, both now leading up to and through our full implementation of CECL and after. And so capital return and capital allocation is going to be something that I think we talk about in one way, shape or form. Could the form of that capital return change over time to the exact strategy change? Maybe. But I don't think the commitment to capital return is going to change as long as I'm the CEO and as long as we have [ the formula ]. We all fundamentally believe in that. As we've talked about in a couple of settings in the past, we have what is in practice a pretty simple thought process for how we think about shares -- loan sales and share buybacks. And you can think of it is a little more complicated than this, but you can think of it effectively as a matrix. And we look at our valuation and multiple on access, and we look at loan premium and capital generation capabilities on the other. And that obviously gives us a great sort of green, yellow, red zone for when it makes sense to sell loans and buy back shares, make sense from getting full NPV value for the loans, make sense in terms of accretion, makes sense in terms of overall economic value creation, all of that is a part of the formula. We are well in the green zone today. And while I think we signaled on the last call that earnings premiums have come down a little bit for the reasons you talked about, guess what? Our stock price has [ ticked ]. In that relative relationship, we still think it is a really smart thing to be thinking about selling loans and using that freed-up capital and premium to go and buy back stock. And I expect if current conditions exist, we'll continue to be in the green zone as we head into next year. And so what I think we've said very publicly is our intent is to create and maintain a flat-ish balance sheet as we head up through full implementation of CECL. We've used the word flat-ish very purposefully. We'll always be a little bit opportunistic plus or minus based on what's going on in the market, and we may choose to do a little more or a little less in any given year based on prevailing market conditions. I think you all as investors would want us to do that. But I think our commitment is as long as we're in that green zone, we're going to keep pushing forward with that strategy.

Okay. And does the full CECL phase-in have any impact on that longer term?

Yes. post-CECL and again, we're not trying to be mysterious about any of this. Post-CECL, the grid logic, the loan sale logic changes, but so too does the organic capital generation capability of the firm. So what we've seen is when we get past CECL, we will be able to both grow the balance sheet and return significant capital to investors at the same time. And so I think we've always felt like the limiting factor on our strategy, our capital return strategy was not how much capital we can generate, but how efficiently and effectively we can return that capital to shareholders without, for example, distorting things like equity prices. And so I think our view is post-CECL implementation, the exact amount of loan sales will probably shift. We'll probably ratchet it back some. My guess is we'll always do some loan sales because we want to show the external validation of the market value of the asset. We want to keep that funding channel open to us. But my guess is post CECL, we will move to a capital return model that looks more organic and a little bit less dependent on loan sales, although we think loan sales will still be…

Okay. Great.

Sorry. What's your desire to get to investment grade? You're a crossover candidate at this point from your ratings perspective. Just wondering what your appetite is for that.

Yes. I'm not going to be able to give you a super specific example. I'm not sure we've talked about that in specific details, but I'm happy to give you the strategic answer. Look, we would love to be investment grade, and we're in active discussions with rating agencies right now and understand very fully what they are looking for from us to get to investment grade. There are some of those things that we think are easier for us to deliver with certain rating agencies. There's a few of those things that may be a little bit harder. I think we are willing to invest to get to investment grade. But quite frankly, we're not willing to overinvest to get to investment grade. So we've got a really good understanding of what we think that would do to things like our borrowing costs and the amount of value [indiscernible] trying to get that right. But it is certainly on our radar. And if we can figure out a cost if that's the way to get there, I think it's something we would love to do.

Great. Turning next to the Biden's Administration's recent announcement around loan forgiveness. Can you just talk about what your thoughts are on that and what implications of any you see you're having on your business?

Yes. Look, it's obviously been a long time coming, and I think there's been a chance for lots of discussion on this. And ultimately, I think Biden did largely what he's been talking about doing for a while here. The short answer is the direct implication on our business is negligible. This is a forgiveness policy that high definition only relates to federal loans, not to private loans. There is no authority whatsoever providing to forgive, cancel or repay the kinds of private loans that we originate and sell every day. And at the end of the day, a [ constraint ] to that market I think what I would add though is, I think in the short to medium term, there's probably a couple of small positive impacts on us. No doubt this on the margin increases, the creditworthiness of our borrowers. We know about 80% of our customers also have federal loans. And so if they're enjoying some degree of debt forgiveness, that's a net positive for us, even if it's only of the $10,000 variety. By the way, I think we know that up about 80% who have federal loans or back-of-the-envelope analysis. And again, rough justice, we don't have specific current tax information. But we think probably about 80% of those, 80% will get some form of a loan forgiveness as a part of this program should go through. So we think it will have a small but meaningful impact on credit. We think it will likely also have probably a small positive effect on the future rate of loan consolidation. At the end of the day, if you're reducing the balances outstanding, it just decreases the financial case for consolidating loans. And I think it makes it a little bit hard, especially at the low margin we talked about earlier for consolidators to make those customer acquisitions, business [indiscernible]. What's more interesting to me though is what does this really mean for the long term. And let me be very clear, I'm not going to stand up here and try to predict what outcome. The workings of Washington, I think, are beyond that. But I think what we've observed being a part of a lot of these conversations is the conversation has really switched over the last couple of months. And I think it has gone much more towards how do we keep this from ever happening again. And we hear that certainly from Republicans, but we also hear it from an awful lot of moderate [indiscernible]. You basically looked at this and say, "You can't forgive $500 billion of federal loans and not ask the fundamental question of what went wrong.” Certainly, if any bank out there forgave what, roughly 1/3 to 1/4 of its loans outstanding, there would be tough questions to be answered. And I think what that conversation is showing is a couple of things. One, there's not a lot of appetite in mainly to forgive any more than the loans that have been forgiven and maybe not even that. So I think the risk of, “Hey, are we going to somehow turn around and forgive all college loans, which I've heard a lot about 2 years ago when I joined the company.” That doesn't seem to be in keeping with the current dialogue. And it certainly doesn't feel like there is an interest in expanding the government's involvement and how to pay for higher education. In fact, it seems like there's actually an appetite to [ show ] reduce that. So at the end of the day, I'm not going to, again, predict a political outcome. If I had done that, for example, back when Trump [ paid a visit ] on the White house, I think we all would have [indiscernible] have happened but didn't. But I think the odds of a continued political dialogue here leading to real changes in the federal program that are beneficial to Sallie Mae. However you discount that, my guess is the odds have gone up modestly in the last month versus things to day-to-day have gone down.

Okay. Just a follow-up question on that, though. Do you think that this is as proposed, obviously, it's just a one-time benefit. Does this open the door to more forgiven is longer term?

Yes. Again, hard to predict. One, I think if you look at the Heroes Act, which was the enabling legislation that the Biden administration has cited, that has to be done during the time of national emergency. I think the clock is ticking on COVID as a time of national emergency. So you'd have to have another national emergency for that to happen. I think there's a lot of discussion right now among Republicans and moderate Democrats to clarify the Heroes Act and other education acts to make this broad-scale loan forgiveness, not possible going forward. Now, that's new legislation, that hasn't happened. But I think more importantly, if you look at the political backlash that is starting to take form, it feels like it is growing around topics of basic equity, basic fairness not just for people who didn't get college degrees, but also real questions of equity in fairness for people who did get college degrees and funded them in a different way or have already paid back to one. So again, I'm not going to predict a political outcome. I don't think this opens the door in the short or medium term for broader scale loan forgiveness, I'd be surprised. And I'd be even more surprised than the longer term.

Okay. That's helpful.

Can I jump in for a second? [indiscernible] Encouraging credit update, June versus August, obviously look flat. And just wondering, is it fair to think about that you're being able to [indiscernible] of the credit issues. And so what's been successful?

Yes. On the delinquency side, I think you should expect that delinquencies will stay a little bit elevated through the course of this year and then begin to normalize. By the way, they'll probably never go back to exactly where they were before for the reasons that we talked about with a more mature portfolio, the changes to the credit administration practices, and so forth. But I think we would expect probably another quarter-quarter process of slightly elevated delinquencies before seeing that [ feature ].

I was just wondering if you could comment on cross-sell between Sallie Mae with that customer base has always been to use it to sell other products? What are your thoughts on that going forward?

Yes. It's a really good question, and it sounds like you've been eavesdropping in some of our strategic conversations lately. We very much believe that we have the urgency or building relationships with some of the most attractive customers out there. I think as we came in and really looked at that part of the strategy over the last couple of years, I think we recognized a couple of things and to really do that. One, we needed to have even more customer relationships than we have today. Cross-selling is a great business, but you need to have a fundamental heft of customers to defray the fixed cost of doing that. Two, that there was more work that we could do to really deepen and improve our relationship with our customers so that when we showed up with another product, they had an even better perception of Sallie Mae. And third, that there's a whole cross-sell machine in apparatus that we had the very rudimentary start to, but had not really built out an industrial form. So we are taking steps in each one of those areas. Part of why we were excited about the Nitro acquisition is not only the effect that it has on our core business, and I think you're starting to see that in some of the high school, college freshmen, new to firm, lower CTA type of numbers I shared before. But what Nitro also does, and we did all of this data is out there from when we announced the deal, is it really increases by a large order of magnitude, the number of college customers that we have a relationship with, and that will only grow the longer that we operate together. We are absolutely taking steps right now to further enhance the engagement with and the quality of our existing customer relationships. And we're doing that during school, during [ grace ], during repayment. And we're seeing those Net Promoter Scores move up nicely as a result of all of that. And we are absolutely building leveraging tools and capabilities that Nitro brought to us cross-sell capabilities that will make it easier for us to get new offers in front of customers. By the way, the very first beneficiary of that improves cross-sell capability is serialization in our core business. The very best thing we can do is just sell more student loans and get 100% share of wallet of those student loans. So it is absolutely a part of where we're taking the company. We think that there are some things that we are building in a pretty methodical way to make sure it can be a scalable, attractive, and quite frankly, a resilient business for us. But we like our customer base a lot and look forward to finding ways to further monetize that over time.

Okay. Great. I think we're going to have to end on that note. But please join me in thanking Jon for the talk.

Thank you.