"The Pulse" -- #117 / Knock-On Effects of Student Loan DQs

Recruiting Timeline:

Banking:

Where We’re At:

• SA 2027: Nothing new until mid-September!

• SA 2026: Marsh, Berry, & Co. and Bourne Partners opened apps this week. 118 firms are recruiting for SA 2026

• FT 2026: Santander, Clifton Larson & Allen, and DBD Partners opened their apps. 42 firms are actively recruiting for FT 2026. Internships ended, return offers were distributed, and the floodgates for FT apps opened  

• If you need some interview support or just need a place to vent, check out our Coaching Program: Coaching for banking, consulting, and buyside recruiting | The Pulse. 95%+ of those coached for the summer 2025 recruiting season received offers!

New SA 2026 Applications:

• Bourne Partners: Boutique M&A (SA 2026)

• Marsh, Berry & Co: M&A Advisory (SA 2026)

New FT 2026 Applications:

• DBD Partners: LMM Advisory (FT 2026)

• Santander: MM bank (FT 2026)

• Clifton Larson Allen: Boutique M&A (FT 2026)

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Consulting:

Where We’re At:

• Slightly Smaller release this week. More will be coming in September.

SA 2026 released apps:

• NERA - Summer Research Associate (SA 2026)

• ZS Associates - Strategy, Insights, and Planning Associate (SA 2026)

FT 2026 released apps:

• The Brattle Group - Research Analyst (FT 2026)

• NERA - Research Associate (FT 2026)

  

Buyside:

Where We’re At:

• SA 2026: Haven Capital, Loop, Jane Street, and Link Logistics opened apps this week. Currently, 132 buyside firms are recruiting for SA 2026 seats 

New SA 2026 released apps:

• Haven Capital: REPE (SA 2026)

• Jane Street: Quant HF (SA 2026)

• Loop Capital Markets: Asset Management (SA 2026)

• Link Logistics: RE DCM (SA 2026)

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Market Update: 

Knock-On Effects of Student Loan DQs

The forbearance is over. Payments are due. Interest is accruing. Credit scores are falling. Today, we are back on the topic of student loans. We are going to discuss why DQs shot up beyond historical averages and what greater student loan DQs mean for other sectors of the economy.

Let’s start with a great visual:

After 5 years of kicking the can down the road, student loan repayments are back in full effect. Federal and private lenders want their money back.

I touched upon this topic back in February, before the data was recalibrated: "The Pulse" -- #91 / The Student Loan Story. My claim was that a). FICOs would get re-rated, b). student loan ABS investors would feel some stress, and c). demand for unsecured personal loans and debt consolidation products would increase.

Regarding FICOs, DQs on student loans are leading to an immediate impairment to FICO scores:

At first glance, this looks like the start of a fucking disaster. However, I’d argue that this FICO re-rating is actually very healthy for the economy and consumer lending environment. All of the forgiveness and liquidity pumped into the economy during Covid artificially boosted everyone’s creditworthiness. 

For nearly half a decade, there were millions of people who were severely delinquent on student loans but had near-perfect credit scores. That’s not healthy. Lenders cannot fairly price risk when the underlying borrowers have fake credit.

The whole premise of preventing impairment to credit scores AND placing loan repayments into forbearance was ridiculous. There was NO incentive to make payments. The better solution would have been to give people the cash break by placing payments into forbearance but maintain fair credit score reporting to at least encourage folks to put any EXTRA money towards repayment.

-Why No One is Paying-

I stand on ground that behavioral reasons are more of a driver of student loan delinquencies tracking beyond historical levels than any visible financial stress. Throughout the same period where payments were paused and relief was provided to student loan borrowers, we have experienced real wage growth (graph below), strong employment (U-rate at or below 4.5%), and substantial asset appreciation (S&P 500 +90% over 5 years).

For many borrowers, the hard data points to financial backing to support loan payments. However, behavioral headwinds paint a different picture. The more removed you are from college, the less you care about it, the less you index to it, and the less you value your degree. Borrowers who graduated in 2020 might be onto their 2nd or even 3rd job and may even be starting to think about saving for homeownership. The average monthly student loan payment is ~$300. That’s $3,600 a year that could go to a). repaying unsecured student loan debt for a degree you don’t use or b). saving for a downpayment on a house to raise your future family or… continuing to finance your daily Starbucks Venti with oatmilk, 2 pumps caramel, and cold foam latte?

Beyond the opportunity cost of putting money towards larger life goals such as weddings, downpayments, etc, the other behavioral nut to crack is purely habitual. Habits are difficult to break and for the last 5 years people have not been in the habit of repaying unsecured student loan debt. Instead of getting used to making monthly student loan repayments, they’ve gotten used to daily coffee, or buying clothes, or streaming subscriptions, or Doordash—-you name it. The money has gone elsewhere and people have gotten used to it!

-The Knock-On Effects-

From a consumer lens, it is only going to be more difficult to accomplish large life goals such as financing weddings and buying houses. A ~100pt drop in your credit score moves you down a notch or two into a lower creditworthy category which leads to higher quoted rates and lower approval timelines.

From an investor’s lens, lower FICOs may create an opportunity to capitalize on forced selling. In the world of securitization and structured finance, investors are often relegated to certain concentration limits to limit the risk of the collateral backstopping their investments. One of those being the % of loans with a FICO less than [X]. This depends on the investment type and the investor, but a 100pt drop in FICOs across 9% of consumer spending may create opportunities to buy discounted ABS from previous investors or originators who got pushed outside of their current concentration limits.

If you have the capital available, strongly consider repaying your student loan debt before your credit score gets decimated. Forbearance and forgiveness are not coming back in the near future. Do yourself a solid.

Disclosure: Nothing written here is financial advice or should be used for investment decisions.

The Best Resume For Investment Banking, Consulting, and Buyside Internships

Use this template to a). optimize your format for ATS screens and b). highlight meaningful bullets to interviewers.

Template: Download in Word as .docx.

Every great resume needs to check 3 boxes:

1. Include relevant experiences

2. Show quantifiable detail

3. Show your personality

The resume shared is a fictional persona, but nails those 3 items.

For experiences, organize your bullets like this:

1. Describe the job / responsibilities

2. Discuss a specific project you worked on and your impact

3. Highlight relevant skills / analysis you used on the job

This layout allows the interviewer to understand what you did and how you made an impact. You want your bullets to be broad enough for the interviewer to relate to, but specific enough to serve as a catalyst for discussion during an interview. Most students either have bullets that are way too high-level or are way too specific.

“I don’t have any relevant experience, what do I do?”

Back when I recruited for banking, I didn’t have any relevant experience either. However, I spun my limited experience to sound relevant. Make projects sound like deals: “Executed a $1mm cost savings plan,” “Negotiated with buyers to receive produce in 30 days instead of 60,” “Compared marketing proposals to assess the strongest click rate per dollars spent.”

If you’ve only ever worked minimum wage / customer service jobs, than this is difficult to do because everyone knows you’re capping.

An incredibly important part of the resume is showcasing your personality. While still in college, employers know that your skillset is limited. A better gauge of success is determining if you’re a). able to learn and b). good to work with. You can demonstrate this by describing experiences / activities that you enjoy.

You’re an interesting person, people like working with other interesting people. Show it on your resume even if it is not professional.

Going Forward:

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“The Pulse” #117

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