Thank you for your continued patience. Your meeting will begin shortly. Thank you for your continued patience. Your meeting will begin shortly. Thank you for your continued patience. Your meeting will begin shortly. Good morning, everyone, and welcome to Navient's strategy update conference call and webcast. Please note that this call is being recorded. Currently, all participants are in a listen-only mode. Following the prepared remarks, there will be a question-and-answer session. If you have a question at that time, please press star one on your telephone keypad. If you wish to remove yourself from the queue, press star two. We ask that you please pick up your handset to allow for optimal sound quality. Thank you. I'll now turn the call over to Jen Earyes, Navient Head of Investor Relations. Please go ahead.
Good morning. Thank you for joining Navient's strategy update. With me today are Edward Bramson, Chair of the Navient Board of Directors, David Yowan, Navient CEO, and Matt Palese, Earnest SVP. After the presentation, we will open up the call to take your questions. During today's call, we will refer to a strategy update presentation, which you can find on navient.com/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. We will discuss an illustrative financial model related to Earnest, a division of Navient. This model primarily makes adjustments for anticipated changes in operations, as well as a more optimized funding structure, among other things. This discussion is meant for illustrative purposes only and is not intended to be a forecast of future results.
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 those factors on 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, and various other Non-GAAP financial measures that are derived from core earnings. Thank you. It is my pleasure to turn the call now to Edward Bramson.
Good morning, everybody. Thank you for joining us. I'm going to start on page three. I'm Ed Bramson, the Chairman of Navient. With me today is David Yowan, who is the Chief Executive Officer, and Matt Palese, who runs Earnest, which is a lot of what we're going to talk about today. We appreciate you joining us for the update on phase two of our strategy. If we go to page four, we're not going to spend a lot of time on phase one because it's now behind us. Just to remind you, the purpose of phase one was to maximize the cash flows from our legacy portfolios into the future. David and his team have done an excellent job on that. I have a fair amount of experience in telling you they've done a dozen or more.
This one's been about as well executed as I've ever seen. The upshot of that good work is that in addition to the cash flow coming in that we had before, we've added another $2 billion of discretionary cash that we can use for growth or for other effective distributions. Moving on to phase two, let's start from page five. Phase two is about growing earnings. Taking a step back, when we started this, actually phase one and phase two started at the same time. It's just that we didn't talk much about phase two. What we concluded was that our stock has suffered from inertia for a long time now. Part of that inertia comes from the fact that people still think of Navient as a student lender, which it actually isn't anymore. We make some student loans, but they're relatively small.
In order to break away from that, we decided that we had to do some different things and explain them differently. As we go through the presentation today, when we talk about Navient, what that is going to be is our legacy loans, FFELP, private, our in-school business, which currently is in Earnest, but we are moving to Navient. That is what Navient will be as we go through the presentation. Earnest means our student loan refinancing business, our personal loans, which are in the process of entering, and some other products that we expect to add in the future. The purpose of doing this is twofold. Firstly, what Earnest does is more akin to what a fintech does, and what Navient does is more akin to a specialty finance company. We are trying to help people see the differences.
The other thing is that going back even a couple of years, it struck me that as I listen to our earnings calls, we spend a lot of time talking about things that we report but actually do not control, like floor income or net interest margin on legacy loans. We spend a lot of time controlling things at Earnest, but we are not talking about them. That is one of the things that we would like to change going forward. As we think about Earnest and recognize that it is in a different sector, we say, "Look, we need to start measuring the shareholder value metrics for Earnest differently." On the table here, the things that we look at principally at Earnest are its growth rate, capital intensity, the proportion of fee income that it has. The ultimate measurement is return on equity.
It is not interest margin or other things. It is return on equity. As we go through the presentation, we will tell you about how we have addressed these things. The first two points on the slide are, let us see, reorienting how we explain things. The third thing on the slide is the specific strategic objective that we set a couple of years ago. We decided to grow Earnest because we thought it was such an interesting opportunity. The easy thing to do is to start out and grow it. What you can do when you do that is to say, "Look, we are not competitive today, but if we double or triple, it will take care of itself." The problem with our strategy is that the people you compete with are also doubling and tripling.
You run the risk of ending up in a place where you're still not competitive; you're still good. The goal that we set was to say that at a relatively modest origination level, we'd be competitive. When we are, we grow from there. If you go to page seven, it might be helpful just to remind everybody of what Earnest actually is. We bought Earnest in 2017, 2018. At the time, it probably had a strategy that was in those board-certified laws at that time. We changed that to focus more on education lending. In the last couple of years, we've been moving back in that earlier direction. What Earnest is today, it's actually a brand name of Navient. We do track it. It has its own measurements, but it's actually a division of Earnest at the moment.
What it's been doing is it's originated all new loans, essentially, that Navient's made over the last several years. It's developed all of the new customer-facing software that Navient does. Earnest is fairly self-contained. We are in the process of completing that movement to being able to stand alone. The key thing we're doing at the moment is integrating a capital markets capability into Earnest from Navient, which we'll talk about. Earnest's strategy to date has been to generate long-term relationships with high lifetime value customers. We'll talk about that in a moment. We do plan to go beyond that. I think it's useful to look at who our customers are. If you go to page eight, this is a snapshot of Earnest's customers. We have about 375,000 unique customer relationships today. And next year would expect about maybe another 40,000 to that.
At the time that we became customers of Earnest, they're at least 29 years of age. That says that our average customer now is probably somewhere in the early to middle 30s. Their income is about $120,000 a year. Their FICO score is above 770. If you think about it, that's a very high potential customer group to have. If you go to page nine, this is our people. Earnest today has about 230 employees, which actually is more employees than Navient has now. They're in three hubs: they're in Oakland, Austin, Texas, and Salt Lake City . Salt Lake is where we run our servicing and customer satisfaction operations from. It's a pretty young group. It's an average age of about 33. The executive team has an average age of 44. That's right about where Matt Palese begins with this.
If you go to page 10, one of the points I want to make here is that there are a lot of homegrown Earnest people in very responsible positions, including that the person who runs lending, the person who runs servicing, the person who's handling the personal loan introduction, the person who runs compliance, they're all long-term Earnest team members. What we've been doing recently is to expand the pool of people that we're searching to the industry as a whole. In the last two years, we've started to add people from a broad industry background. There's a person on the chart here in the end who I'd like to call out specially. She's the head of our people operation. She's built an excellent recruiting team.
What's helped her in doing that is when people in the industry who do know who Earnest is come in and talk to us, they're very excited about what we're doing. I think it's very encouraging that we're becoming a destination for superior talent. If you look at the slide, you'll see such places they come from. If you go to page 12, this is just a snapshot of Earnest as we look at it. What this is, it's the expected income statement for Earnest for 2025 on the basis that we have already moved out from in-school and graduate lending that they actually do at the moment back into Navient. On that basis, you'll see that we have a couple of hundred million of revenue. Roughly 25% of that is from income from servicing. I think the other numbers speak for themselves.
For the year, we're expecting an operating profit of around $70 million. If you go to page 13, what this says basically is that at the moment, Earnest has about $10 billion of outstanding loans. Most of them have already been securitized. The ones that are in warehouse will be securitized. I think the point to make here is that the securitized loans actually, although they're on our balance sheet, we've now downloaded them. They've been sold to securitization trusts. We account for them as if they were our assets. They're actually not. If you look at liabilities, the securitization trust buy-ins are buy-ins of those trusts. They're not ours. We just account for them that way. The warehouse buy-ins are actually on our balance sheet, and they get paid off when we securitize the rest of them.
Anyway, on a balance sheet of about $10 billion, we have about 7% of it in equity at the present time. If you go to 15, back at the beginning, we talked about how do you get ready to really compete? That falls into three key areas. What we're saying is that you need to be competitive at the scale you're actually at, which is lower than our competitors. In marketing and product development, we made quite a few changes to significantly strengthen that team. The mandate for that was to increase the lead generation we're getting and get lower lead costs. We'll talk about how that turned out. Another thing that they've been doing is that our marketing is quite effective, but it's sort of reactive marketing.
What it does is it says if you know that you want a loan, we'll make sure you know that we're there. We're in the process of adding to that a more proactive marketing strategy, which says maybe you need a loan and have not thought about it. Also, if you have thought about a loan before and did not take it, maybe you should think about it. As we start to cross-sell, that is going to be an increasingly important thing that we do. The final piece of expanding the team is as we move into personal loans, it is not that it is very different from what we do today, but there are some differences, and we want to enhance the expertise in the team in advance of that introduction. Moving to technology and operations, that is our biggest cost center.
Within that, the biggest thing that we've touched on is IT. When we started out, we had a perfectly serviceable lending platform, but it really wasn't state of the art and it caused a number of issues for us when we tried to change things. The team actually developed, built, and rolled out a completely new lending platform on a pretty tight schedule. It came online in February of this year. It's a tremendous achievement that the team deserves a lot of congratulations for. The difference from the old one is it's a modular architecture, which means that all of the things that everybody needs are in a central core. The things that are specific to student loan refinancing or personal lending, they're modules on top, which means that you can change things a lot quicker and you don't run the risk of corrupting the core.
We got a lot of useful things out of that, including that we now have the basis built for the loan sales platform, which you'll see is in our timeline later in the presentation. Another thing that we got out of this was increased loan automation. And that's two things. It obviously helps you with operating the business as well as the business. It has also helped us to increase our conversion rate quite dramatically, which I also see as we move on. The final part is that Earnest, for a long time, used machine learning to do credit decisioning and pricing. As we expand what we're doing, we want to have more data science that goes into that machine learning. This platform enables us to do that. That brings us to the third thing on the page, which is financing.
I want to take a little bit of time on this because it's perhaps not intuitive. The first thing we did in the financing area is, by anybody's estimation, Earnest is a very, very, very good digital marketer. He's also a very, very good software developer. Navient has an excellent capital markets group, particularly in securitizations. Navient has secured, over its history, hundreds of billions of issuing loans. It's one of the most highly regarded, most experienced securitization teams in the industry. The only thing is they work in Navient. What we did is bring those groups together, and we're starting to see some of the product of that. We're optimizing our products now to fit better with the requirements of our investors and starting to see some results. The other important thing we did is actually to change how we securitize.
At the risk of repeating yourself, securitization is a scale. The economics of this securitization are determined by the portfolio construction in the pool. How the economics get allocated is determined by the form of securitization that we do. In the past, we've typically used a horizontal securitization structure. That's good if you want to maximize net interest income. It's not as good if you want to maximize return on equity. It's also scalable, but it's not easy to sell. The structure that we use now, starting literally this year, is vertical securitization. That doesn't give you as good net interest income, but it gives you much the best return on equity. If you want to sell it, it's the easiest one to sell.
We have a third hybrid, which, if you plan to keep something, might be better than either, but it's literally almost impossible to sell it through the way you're at. What we see going forward, all of the new securitizations now are vertical securitizations. If you go to page 16, one of the things we've had up to now, the things we've actually completed, and it says that on the slide you can notice. This next issue comes right against financing. It's something that's ongoing. We want to get the loans that we generate in the future off balance sheet as much as we can. The fashionable way of doing that at the moment is through loan sales. Loan sales have a particularly good attribute, which is that they get the loans off the balance sheet. They accelerate the income that you get.
There is no continuing equity. From an accounting standpoint, that is very profitable. Everything has a cost, and a lot of the economics that are involved in those loans can end up being transferred to the buyer of the loans. Securitization actually is a cheap way of financing. If you think about it, the securitization market is enormous. It is very deep. It is very liquid. A lot of the securitizations that we do are registered by trading and then have an agency rate them. The liquidity premium that goes with that actually accrues to us, which is why it is such an effective way of financing. It does require some continuing equity, and it does have to be on the balance sheet. That is the downside of it.
What we're looking at at the moment is maybe innovating in some ways that would enable us to get the accounting benefits and the economic benefits. I can't promise you we'll be able to do that, but we'll come back to it in 2026. If we go to page 17, we've been doing all this stuff. How do you expand that? Back at the beginning, we talked about the way we were going to measure earnings from a shareholder value point of view. The first thing we talked about was getting the growth data out. The base year we're using here is 2023. That's because it's before we started phase one and two. Since that time, you'll see that our originations are about two and a half times what they were. More importantly, in some ways, a statistical quarterly rate check volume is quadrupled.
What that is, is when somebody's interested in getting a loan from us and requests a quote, that's a lead check. When we talk about getting our lead generation up, that's really what that is. If you look at sales and marketing expenses, even though those statistics have doubled and quadrupled, sales and marketing expense actually stayed about flat. We've achieved the goal of getting the lead generation up and generating lower cost. What it means is our sales and marketing expense to originations is down to 2.3% this year. The next strategy was getting efficient from an operating standpoint. If you look at lower origination, for example, the new platform's taken us from 57% up to almost 80% and having them degrade there. The conversion rate, which is a critical economic factor, is up almost 50%. We're supporting three product lines instead of two.
We are dealing with about 4% of originations, which is a bit better than the 6% we are at. Turning to the bottom of the slide, let's compare a typical 2024 securitization with a typical 2025 securitization. Normally, you would expect that when our volume is going up as much as it is, the way you would do that is that your credit score would go further down so you can address a bigger part of the market. If you look at the chart, our FICO scores actually went up. That is actually deliberate. The reason for it is that with the higher-end credit in the pool, we are able to increase the percentage of the pool that is going through AAA, which enables us to reduce the initial economic equity we have to put in. When we are focused on return on equity and use vertical securitization, that is the impact of this.
That is also, I think, been quite successful, as you'll see. If we go to page 18, going back to what our original goal was, it actually was not to get better. It was to get to be competitive with other people, which is a completely different measure. Also to be competitive with them at the lower volumes that we currently operate at. If you look at this chart, it has some efficiency measures on it, which I think you can read for yourself. It says that our originations at the moment are in a growing lot. I'll say it is a fourth of Upstart's and maybe a fifteenth of SoFi's. We will have to address that. Even at that lower scale, our sales and marketing expense to originations and our operating expense to originations are well in competition with these people.
Two years ago, you could not have said that. This is exactly what we set out to do. It's exactly what this young and enthusiastic team of people has done. I told some of my colleagues about this and said, "If this were a video, I'd do a mic drop." They said, "It's in my book," which takes us to page 19. What does this mean for shareholders? What we have on the chart here is Earnest, which actually doesn't have a listing. It doesn't have its own valuation, but it's part of Navient. The peers that we've talked about. It's pretty rare to hear a management team not whining about how the market doesn't understand how great they are. I'm not going to bother doing that.
If you look at the price earnings and market values and comps, they're obviously much better than Navient. Earnest is part of Navient. In addition, it has, I believe, $700 million in cash at the end of last quarter. It's got significant discretionary cash flow coming in from its existing investments. It's going to have an in-school origination business and the earnings of Earnest. The only point I would make is that for all those firms, to be at 0.6 of book compared to the others seems like it's an interesting opportunity. How do you work on that gap? That comes back to the improved disclosures that we talked about, presenting the information in a different way.
If you think and hope that over time, the perception will become that to a greater and greater extent, Earnest is Navient, and we hope that that will help to address the stagnation there. If we go to page 20, in order to accomplish what we say we want to do, we've now become competitive at small scale. We have to get to be bigger scale, which means that we need to address markets that are bigger. I'll talk about that in a moment. If you take the core business of Earnest, which is the high lifetime value customers, we've spent about $350 million over the years to acquire our current customer base. The way to think about it is that a 40-year-old comes in, they're refinancing, they're even there.
Over their life, they're going to need other products in various stages that we may or may not want to provide to them. Probably by the time they retire, they're going to want wealth management. The way we would monetize those things really depends on what they are. We could do new products like some people do. We could do partnerships for some of them. The ones that are really interesting, look like big opportunities, you might even make an acquisition. The fact is, though, that because our customers are late 20s, early 30s, they actually don't need most of these things yet. The next logical thing that they're going to be interested in is personal loans.
The reason for that is they're moving into a stage of life where they have those needs, and they're also bringing down the student loan refinancing debt, which gives them more capacity. We are going into that. One of the benefits of it is that that $300 million that we spent, we can now maybe monetize over two or three products rather than just one. That is the lifetime customer value statement. Having the infrastructure that it takes to do all those things in marketing, technology, and so on, we do have an infrastructure that we could leverage over different markets. It is not a novel observation of the people who are doing it, but we do have it in our timeline to add a loan sales platform within the planning block. Page 21. If you need a growth opportunity, markets need to be bigger.
What are you going to do? We have moved the education and graduate lending down into a bullet. That is about a $12 billion annual opportunity, which henceforth Navient is going to be addressing itself. That leaves Earnest doing student loan refinancing and personal lending. In 2025, student loan refinancing, the total addressable market is somewhere around $8 billion. Because of the tailwinds from interest rates and other factors, we think in 2026 that is going to be $11 billion. It is worth taking a second to talk about that. The actual TAM for student loan refinancing in 2026 is going to be about $135 billion. The fact is that nobody has ever been able to get more than 8% of the people who would benefit from taking a loan to take one. One of our marketing strategies is to start to move that percentage up.
That's not what's assumed here. In personal lending, we don't do any this year. In 2026, we're not expecting to do very much. We're talking about just a proof of concept type lending. The $36 billion we've put on there, I think it's important to say what that is. That is people who, it's about 4% of the personal loan market, by the way. Those people are those who have a 750+ FICO and have a credit file that's aged from five to 15 years. If that sounds like an SLR customer, that's because that's who that is. In 2028, the customers are the same. It's just that because they've aged, they're now moving into an age category where they have a higher propensity to do personal borrowing. It's the same people that's getting a little bit older.
On the $36 billion, I think an interesting point to make is if you look at all of the people in that category, we're 2.4 million of them. We have 400,000 customers who look like that, who clearly have a relationship with us, and there are a lot more of them who know what we are. In that group that moves through its financial lifetime, we're very well positioned. If you look at the thing a bit more broadly, what we're saying is in 2025, our total addressable market's somewhere between $8 billion and $10 billion. In 2028, if you just do what we're doing today, the addressable market's maybe 10x as big. I think we're not really troubled about the opportunity to find the assets we need to prove out our strategy. We go to page 22. There's a lot of growth here.
How are you going to finance it? The way we think about it is this: on our current balance sheet, because of the way we've been financing our securitizations, we have about 7% of equity or assets. In the future, as those loans come in, we're going to get 7% back, and we're either going to put out something less than 2%, or we're going to sell them and put out nothing. Our expectation is that as we currently look at things, all the equity that Earnest has today is all the equity it's going to need. If we see additional opportunities being part of Navient, which is very well financed and has a very large amount of discretionary cash flow, we have all the capital we might need to take advantage of those opportunities as they come up.
The other thing I did not want to forget is we said that one of our objectives was to increase the proportion of student coming in the mix. As that origination volume grows, the service incomes with it. As we are going to personal lending, there is also an opportunity to see origination student income. On point three, we talked about our timeline. This is a very detailed version of it. As you can see, from now, till 2028, we are going to be putting a lot of effort into expanding that 8% of the addressable market that we have in student loan refinance. In 2026, we are making some personal loans. The reason we are doing it is to have a big enough sample to get a vacant agency vacant.
We're assuming it's going to take until the end of 2026 to do that, which is why we're not assuming a great deal of volume. If it happened a bit sooner, we would accelerate because we'd then be in a position to securitize the loans that we generate. If we wanted to sell them, we'd need the same data to sell them anyway. The full launch is therefore assumed to be in 2027 for those high-value customers to focus on the market. In 2028, we would launch a sales platform. The reason we wouldn't do it sooner is if you don't have the inventory, you don't need it yet. Finally, ongoing is the transfer of the in-school and graduate loans to Navient. To sum up on page 24, we started phase two at the same time we started phase one.
It's just that it was happening in the background. During those two years, we've completely transformed Earnest's ability to compete and to compete in expanded markets. Because of what we're doing and making it clear what we're doing and what our objectives are, we think we can increase the ability of the market to discern what is really going on and how to value that. The last thing I want to point out is momentum. 2026 is the transition of the year. We have a little bit of personal lending, but it really doesn't take until 2027. On the other hand, with HR volume and SLR, sets us up for, I think, a pretty good year next year. There will be some personal lending, maybe more than we think.
There are some drivers in the graduating school business that could also lead to not only this increase in Navient's overall originations. We are looking, even in this transitional period, to be able to get to maybe around $4 billion of originations this year. That is not a forecast. It is not guidance. We will do that later in the year and then hopefully grow from there. That is it. I have been talking a lot. We do want to take some questions, but at the middle of the day, the market is open. We would like to just take a few. I would like to issue an open invitation to anybody who wants to discuss this further. If you contact investor relations, we will be happy to set up a one-on-one call and answer any other questions that you might have. With that, I would like to open it up for questions.
Thank you. The floor is now open for questions. At this time, if you would like to ask a question, please press star one on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star two. Again, we do ask that you please pick up your handset when posing your questions to provide optimal sound quality. Lastly, please limit yourself to one question and one follow-up. Our first question will come from Bill Ryan with Seaport Research Partners. Your line is open.
Good morning, and thanks for taking my questions. First question relates to page 12, the Earnest financial snapshot. It shows $75 million of operating profit. Then on the other slide, there is $644 million of tangible equity. It looks like a pre-tax ROE of about 12%. Since it is a 2025 snapshot, I assume there are no loan sales in there. There is obviously a CISO charge. During the presentation, you talked about pursuing capital-like structures for funding. Is it fair to assume that the 12% is the baseline that we are starting off at, that if you pursue the capital-like structures, it would give it quite a bit of boost from that level? Also, following up on that question, what is the pickup in the ROE as you change your securitization structures towards vertical?
This is Ed. I'll take those questions. Before I do it, I don't think I quite understood the last question that you raised about ROE. Could you say that again, please?
Yes. I was just wondering what the pickup in ROE is between your two securitization structures as you move to vertical.
Fair enough. On the 12% ROE, I'm not sure if I didn't make you run the calculation. I'll take your word for it. That would be pre-tax, of course. I mean, there are a lot of things that we're talking about doing to actually move all of the loans off balance sheet. There are other reasons to get them off, including volatility, which is not helpful. I think the way to think about it is that if you looked at the existing balance sheet, you could do everything on there that's kind of about $700 million of equity in it if you turned it all over for about $200 million. Whatever the return on equity is now, everything else equal, you're looking at maybe two or three times that by going to a different securitization strategy. It's not quite linear, but it's sort of linear.
Okay. As a follow-up, just kind of a question about the TAM that you highlight for lending in the in-school channel. It is $12 billion, $9 billion of undergraduate, $3 billion of graduate. I am thinking about it that way. If you take the $9 billion, it is a little bit less than what the private student loan origination market is today. It looks like you may have excluded possibly some pockets of lending in private school lending. Secondly, as it relates to the graduate side, the $3 billion, I think the number you used historically is about $1.5 billion of that is currently private. Is it the number to assume that you are assuming about $1.5 billion comes in from grad plus in the second half of next year?
I'm not the best person to answer that because I've been talking about Earnest and we're moving that over to Navient. Maybe David would like to take that or.
Yeah. Hey, Bill. This is David Yowan. Thanks for the question. Yeah. I think the, yeah, I think you've got it about right in terms of how we get to the $12 billion. As you know, there's a variety of different estimates of size of market depending on what your underwriting standards are, etc. Certainly, that's true with grad plus as well. There's a lot of uncertainty. The ecosystem will be disturbed beginning next year. I think what we're trying to communicate is that for us, the in-school product sits well with specialty finance from a financial profile, from a competitive set perspective. We just completed in the third quarter our highest quarterly volume of in-school product. Yeah, we're confident in our capabilities to find the customer segment that we've been targeting. It's predominantly the graduate student.
Those capabilities that we've been developing, we're going to continue to rely on. They're not leaving the company. Since they have that different financial profile and different competitive set, we're going to have those outside of Earnest. We've got a very experienced team that's still going to manage that product. We've got executives at Navient, excuse me, that have decades of experience in student loan origination. We are confident in our ability to take advantage of those opportunities as they present themselves.
Okay. Thanks for taking my questions.
Thank you. Our next question will come from Jeff Adelson with Morgan Stanley. Your line is open.
Hey, good morning. Thanks for taking my questions. I guess maybe just wanted to dig in a little bit more into what gave you the confidence to decide this pivot into a newer product in personal loans. It's a pretty competitive space. You mentioned this is a natural extension of customer need where I think you're largely refinancing our customer student loans today. Is your research indicating that a high percentage of those customers are looking for personal loans? They're leaving your ecosystem to get a personal loan. I guess maybe how do you think about your go-to-market strategy here in a way that would let you get that share, drive consumers to you over the competition? What do you think your advantage is here at this point?
Maybe also just touch on it sounds like you're targeting existing customers, but maybe what's the mix of existing versus new that you're thinking about as you kind of roll this business out?
This is Ed again. I'm going to open it up to others to speak. I think an important thing to bear in mind is what we're looking to do here. We're in pilot at the moment. Let's assume that next year we would do $4 billion of originations and almost none of them will be personal lending. Let's assume that the growth rate you're looking for is 50% in 2027. That basically says you don't need to get a lot of loans. We have 400,000 customers already in that category that we're starting to market to on a pilot basis today. We're feeling our way into the market. Once we get that done successfully, all sorts of other avenues will open up.
If you go back to the team page, if you look at the people we've brought in, these people are the cream of the crop in personal lending. Emily's from Credit Karma, for example. They know that market very well. Amir's from Upstart. I would say that at the moment, we have a very clear idea of how we're going to get the first few million. After that, we'll see where it goes. I'm not going to turn it over to Matt because he knows much more about it than I do.
Thanks, Ed. Jeff, thanks for the question. Yeah, I think to Ed's point, what I would add on to that is we've been helping customers pay down debt for the last 10 years. We are and have been focused on a very specific demographic. We know exactly what they do. We know where they shop. We know how they behave. We've been extremely successful at executing that. A lot of the things that made us successful is by bringing a differentiated product to the market. The way we think about being differentiated is by having more flexible, more transparent, and best-in-class customer service. The combination of those three things has built significant trust from these customers, which, as you know, as these customers evolve throughout their financial journey, they're looking for a partner and for a lender that they can trust.
To Ed's point, I'm highly confident that we have the capabilities, we've made the right investments, and we're delivering a differentiated product with the right features that will resonate with this customer base and allow us to compete successfully.
Okay. Great. Thank you. Could you maybe just, I know it's kind of early, you're talking about the loan sale opportunity not really coming until 2028 here potentially, but any sort of early conversations you're having with private credit players or other investors, whole loan buyers who might be interested in actually taking a look at this product and maybe even just extend that to some of the conversations you're having on the student loan side from the potential whole loan sale or flow side as well?
David, do you want to take that one?
Yeah. Look, we feel really confident about our ability to distribute products to the investment community in whatever way makes sense for us economically. I think Ed laid out the fact that today securitization has the preferable economics associated with it in terms of lifetime economics to the extent that we need to and have opportunities to sell loans, which accelerates the income in that. We feel really confident in our ability to do that. I'm not going to get into discussions about any particular avenue to do that other than say I think our record in distributing products to the investment community speaks for itself. Ed talked about it, not just in securitization. We have done sales that are securitization-based in the past. These are not unproven or untested capabilities. They're credentials that we have.
The only thing I'd add to that is if you look at the timeline for 2026, we're focused on getting an agency rating for our personal loan securitizations. The reason for that is that the information that the rating agencies want is exactly the same information that you need when you get into loan sales. We've been talking to people, and basically the situation is once you have that data ready, let's sit down and talk about it. I think that's a broader way of looking at it as the 2026 issue.
Great. Thanks for taking my questions, guys.
Thank you. Our next question will come from Moshe Orenbuch with TD Cowen. Your line is open.
Great. Thanks. I guess kind of pulling up at a high level, just trying to understand the timeframe here. I guess I'm kind of struggling with this. You tout the idea that the originations are up two and a half times from 2023, but they're still down over 50% from the peak a couple of years before, a few years before that. You certainly had the scale, I guess, at some point to do those originations. To be planning this stuff two to three years out seems to be the uncertainty around what other players will be doing in that time, what capital markets might look like versus where they are today. I guess it's just not clear to me what's been going on over that last two years and why this needs to be something. I mean, I guess I'm struggling with this kind of timeframe.
This is Ed again. I'll open up the chat if you want to speak. I think first thing is if you are struggling, probably the thing to do is to give us a call, and we'll have a one-on-one to discuss all of your questions. I think the other thing is that rather than get into why this is good or bad, I would say what I always say to people, just look at the numbers and see what happens. I think that's probably the best answer I can give you today, but you're more than welcome to give us a call if you contact IR. I think we have time now for maybe one more question. I might just move up next, but do we have another question in the chat?
Thank you. Our next question will come from Rick Shane with JPMorgan. Your line is open.
Hey, guys. Thanks for taking my question. I guess I'm a little bit surprised that we didn't hear more grad plus. I understand the pivot towards Earnest. The disclosure that was given today, you show net interest income for Earnest in the last or on a sort of pro forma basis for $25 million or $168 million. I'm trying to go through the disclosure and sort of link this up to what we know about the company today. Earnest is largely in the consumer finance segment. The net interest income there over the last 12 months is over $400 million, but Earnest represents, I think, about 2/3 of the assets in that business. I guess I have really two questions. How do we reconcile the numbers that we're seeing here with the size of the balance sheet?
You guys have said in these slides that you're going to provide, you're going to break Earnest out. Are you going to break out? I'm just trying to think about what the disclosure is going to look like. There's going to be an education lending business separate from Earnest. Earnest is going to have consolidation loans and personal loans. Education is probably going to have self runoff. And I assume any private student loans in school, whether it's undergrad or grad. Is that right? How do we reconcile this Earnest snapshot with the information we have today?
Yeah, I'm not quite sure I did your full question, but what I would suggest is let's have a call after we wrap this one up, and we can probably go into a bit more detail for you. I think that's probably the end of the question session for today. We really appreciate everybody who's joined. We'll extend the invitation again to contact IR. We'll be happy to talk to you more. I'd like to suggest we wrap it up.
Thank you. This concludes today's strategy update conference call and webcast. Please disconnect your lines at this time and have a wonderful day.