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US LevFin borrowers in the education industry are feeling pressure in the face of sunsetting government funding, higher tariffs on Asian supply chains and reduced school enrollment.

Prices for loans and bonds from Lakeshore Learning, Houghton Mifflin Harcourt, Imagine Learning and Renaissance Learning have tumbled this year, with some securities trading at deep discounts after starting near par earlier in the year.

In particular, 9fin sources pointed to the importance of Covid-era stimulus from the US federal government which aimed to make up for student setbacks caused by pandemic-driven classroom closures.

The $190bn approved under the Elementary and Secondary School Emergency Relief (ESSER) fund were earmarked for hiring additional teachers and providing extracurricular programs, among other uses, and companies like Lakeshore and Renaissance that provided classroom supplies and learning software have been beneficiaries.

Although the ESSER fund expired in September 2024, school districts were given an additional few months to spend those funds beyond that deadline. But the funding cliff has nevertheless been difficult to manage for schools and other borrowers that have relied on this spigot of government funds.

“A lot of these education companies got all this Covid funding. As those began to sunset, like in the case of Renaissance, their orders have been impacted,” said one buyside analyst.