Private student loans attracts investment

Fri, 08/30/2024

by Ellie LeTu

Source: WSJ

• PE firms capitalize on banks’ higher capital requirements

  • Carlyle Group and KKR have acquired over $10B worth of private student loans since July.

  • Increased capital requirements for banks are driving asset sales, including private student debt, to maintain liquidity.

• Appeal of private student loans investment

  • Private student loans take up a minimal portion of student debt —> limited purchase for secondary investors.

  • The Biden administration's federal student debt forgiveness reduces the credit risk for private student loan holders.