Cloud 9fin Syndication Nation — Education borrowers taken to task
Nov 14, 2025
Sunny Oh, a senior reporter focused on U.S. leveraged finance and education-sector borrowers, tackles the challenges facing private equity-owned education companies. She reveals how the expiration of the $190 billion ESSER funding has created a significant financial gap, prompting investors to reevaluate risks associated with firms like Houghton Mifflin. Oh also highlights the impact of falling school enrollment, trade war-related cost increases, and the potential for future restructuring in a tightening market.
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Education Companies' Client Base And ESSER Reliance
- Private-equity education companies sell books, software and classroom supplies to state school districts.
- The sector relied heavily on ESSER, a $190bn federal program that has now rolled off and created a funding cliff.
Debt Market Repricing Of Education Issuers
- Debt for many education issuers fell from par to the 80s after ESSER rolled off this year.
- Investors and restructuring advisors are increasingly scrutinizing these credits for potential trouble.
No Immediate Defaults, But A Clear Funding Hole
- There are no imminent bankruptcy triggers for most issuers, but revenues fell as ESSER wound down.
- The funding hole was well telegraphed but replacement federal dollars remain unclear.