That’s according to a report Wednesday (Oct. 7) by Bloomberg News, which calls this one of the biggest corporate implosions related to President Donald Trump’s immigration crackdown.
According to the report, Mpower had been relying heavily on students from African countries like Zimbabwe, a country the White House placed on a travel ban list in 2025. A source with knowledge of Mpower’s lending strategy told Bloomberg the concentration of loans to Zimbabwean students had expanded beyond what the company intended, leaving it particularly vulnerable to the new government policy.
The report added that Mpower’s business model revolved around the use of “warehouse financing” to fund student loans, then bundling those loans into asset-backed securities (ABS) sold to money managers. Demand for those securities waned when the travel ban went into effect, curtailing Mpower’s ability to make new loans, Bloomberg said, citing an investor letter.
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Mpower has since embarked on a failed effort to put itself up for sale, has cut most of its staff — including founder and CEO Manu Smadja — and warned equity investors they would likely be wiped out, the report said.
The investor letter also said Mpower has more than $400 million of outstanding ABS, and is in discussions with creditors about the fate of its remaining assets and operations.
A message on the Mpower website says the company has reached its “current funding capacity” and is “temporarily unable to offer new loans for 2026.”
The news comes as millions of student loan borrowers are scrambling to pick different repayment options under new governmental rules.
As covered here last month borrowers on the now-defunct Biden-era SAVE Plan must choose a new repayment plan within 90 days of receiving notification, or be automatically moved to an option that would saddle them with the largest increase in monthly payments.
Research by PYMNTS Intelligence into student loans has shown a mix of regret and pride among the borrowers who have taken on debt to finance their education, particularly among people who live paycheck to paycheck. As covered here last year, one-fifth of that cohort said that education expenses are part of the reason their budgets are tight.
“Regret sits alongside resolve: 37% regret their financial choices about education, yet 63% would make the same decisions again despite the hit to their finances,” PYMNTS wrote.
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