Private Equity is Buying Student Loan Debt

Why some private equity firms consider student loan debt as an attractive investment opportunity.

Author

Kieran Ryan
August 30, 2024

Good morning, Nerders. It’s Friday, August 30th. In today’s newsletter, we cover:

  • Student Loan Debt — Private equity firms go bargain hunting for student loan debt

  • Digital Wallets — The use of digital wallets in the U.S. is on the rise

  • $20 — The impact of California’s $20 fast food minimum wage

TODAY’S STORY

Private equity wants to be a bigger player in the student loan market.

New proposed rules make it so U.S. banks have to set aside more capital to guard against risk.

As a result, banks have been looking to shed some of their loan portfolio, including student loans, at attractive prices to help transactions close quickly.

Private equity firms have been active buyers of student loan debt:

  • Carlyle Group and KKR won an auction for a $10 billion student loan book in June

  • Carlyle Group bought a $415 million student loan portfolio in January

Student loan forgiveness efforts could also benefit buyers of private student loans. If the government forgives federal loans, students may find it easier to manage and repay their private loans since they have less total debt.

So, as banks drop out, private equity steps in.

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DATA BYTES

  • Use of digital wallets in the U.S. is on the rise: Consumers are using digital wallets for their convenience and security — they can make purchases without exposing sensitive debit or credit card data

  • U.S. consumers embrace digital wallets for online shopping: They are 23% more likely to use them for online shopping than in-store purchases

  • Consolidation of digital wallets: The share of consumers who manage three or more digital wallets on their phones fell from 30% in 2021 to 20% last year

#SHORTS

The Impact of California’s $20 Fast Food Minimum Wage

PREVIOUS STORIES

  • The Rise of AI Washing — Companies might falsely tout their AI technology to boost stock prices and win more customers.

  • Add It to the Tab — COVID-19 surcharges, water donations, and health insurance are some of the new surcharges appearing on customers' bills when they dine out.

  • Puzzle Wars — A look at the secret sauce behind the incredible success of the New York Times puzzle games.

  • Why Hotel Chains Don’t Own Their Hotels — Hotel brands like Marriott, Hilton, and Hyatt own less than 2% of their hotels.

  • Chase Bank: A Media Company — Chase is the latest to launch a so-called retail media network like Amazon Advertising, Walmart Connect, and Target’s Roundel.

To read the web version of previous stories, click here

If you have any comments or feedback, just respond to this email.

Thanks for reading,
Kieran & Justin Ryan