According to Mizuho analysts in a note Tuesday, the buy now, pay later (BNPL) student repayment worries are overblown.
They were speaking on the worries regarding the BNPL industry and how the return of student loan repayments could impact it.
Per Mizuho's proprietary survey of ~300 BNPL users of Affirm Holdings (NASDAQ:AFRM), Block's (NYSE:SQ) Afterpay, Klarna, and PayPal (NASDAQ:PYPL), "~50% have student loans and may see an additional annual expense of ~$3,000 or ~4% of their average household incomes. This also means that the BNPL space as a whole may face a ~2% headwind," the analysts wrote.
Mizuho also sees other reasons to be optimistic, with their survey showing that borrowers with student loan debt tend to have higher incomes vs. those that don't, while "borrowing simultaneously across multiple BNPL apps is linked to having higher income, which reduces the risk of over-borrowing."
Despite the positivity, Mizuho analysts acknowledged that some risks remain, such as BNPL users with student loans tending to use a greater number of BNPL services/apps compared to those without student loans.