Private-equity firm Carlyle has bought a $415 million private student loan portfolio and invested in Monogram, a platform that works with financial institutions to help them offer student loans, the companies said Wednesday.
The portfolio comes from Truist, according to reports from Reuters, Bloomberg and American Banker. But the Charlotte, North Carolina-based bank is not mentioned in Carlyle’s announcement. Nor is there mention of the transaction on Truist’s website.
The deal, nonetheless, would mark further encroachment on student lending by private equity as banks turn away from the segment. Akhil Bansal, Carlyle’s head of credit strategic solutions, highlighted as much in Wednesday’s announcement.
“There is an opportunity for private markets to fill the gap left by traditional lenders reducing their lending to families to finance their higher education goals,” Bansal said.
Monogram will partner with Carlyle to originate, acquire and manage third-party private student loan assets, the companies said Wednesday.
Monogram counts more than $7 billion in private student loans under management and offers customizable private-label programs, school sales and marketing support, active portfolio management and loan loss protection, the company said.
Partner banks “don't need to stand up a whole new compliance team,” Monogram CEO Seth Gelber told American Banker. “They don't need to stand up an origination system and an origination team and a school sales force."
Carlyle did not disclose the size of its investment in Monogram.
The tie-up comes as a number of traditional banks are retreating from student lending. Discover, for one, announced in November it is looking to sell its $10.4 billion student loan portfolio. The card issuer enlisted Nelnet to handle the servicing on that portfolio, it said this month. Wells Fargo, for another, “narrowed” its focus on student lending in 2020.
Truist, meanwhile, said in July that it had sold about $5 billion in student loans, according to American Banker. A spokesperson for the bank did not respond Wednesday to a request for comment from the outlet.
Truist is re-examining its priorities as it looks to recognize $750 million in cost savings by early 2025. The bank said in September it would make “sizable reductions” in its workforce and, in October was reportedly in talks to sell the remainder of its insurance business to private-equity firm Stone Point Capital. Stone Point last February agreed to buy 20% of Truist Insurance Holdings for $1.95 billion.
The student market has even spelled trouble occasionally for traditional banks. JPMorgan Chase in late 2022 sued the founder of Frank, a college financial planning platform it bought a year earlier, claiming the startup’s executives vastly exaggerated the platform’s customer base. The Justice Department and the Securities and Exchange Commission charged Frank’s founder, Charlie Javice, with various counts of fraud in April 2023.
