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The AltFinance Fellowship is introducing more than 100 students at historically Black colleges and universities to a $10 trillion industry that includes private equity, private credit and commercial real estate.
Ares Management, Apollo Global Management and Oaktree Capital Management are spending $90 million over the next decade to fund the fellowship.
In 2020, Black people accounted for 1% to 2% of the investment deal teams in the private equity space, according to McKinsey.

Antony Ressler, co-founder of Ares Management, takes photos with students of the AltFinance Fellowship.
Marcus Shaw, AltFinance

The search for bigger profits and top talent is nothing new on Wall Street, but some firms are turning to an almost untapped resource: historically Black colleges and universities, or HBCUs.
The AltFinance Fellowship is the brainchild of top alternative investment firms Ares Management, Apollo Global Management and Oaktree Capital Management. The three firms are investing $90 million over 10 years into the program, which is providing more than 100 students at HBCUs with paid experience, mentorship and networking opportunities.

Selected students will also receive a scholarship of up to $10,000 if they’re sophomores, while juniors and seniors can receive up to $15,000. Partnering schools include Clark Atlanta University, Howard University, Morehouse College and Spelman College.
The program aims to give students of color an opportunity in a booming industry that hasn’t been the most diverse. The private equity, private credit and commercial real estate industry has about $10 trillion in assets under management, according to data provider Preqin. Meanwhile, in 2020, Black people accounted for 1% to 2% of the investment deal teams in the private equity space, according to management consulting firm McKinsey.
“This is not a charitable activity,” Howard Marks, co-chairman of Oaktree Capital Management, told CNBC. “I think it has some socially beneficial aspects to it. But that’s not the only reason we’re doing it. We’re also doing it because we believe it can enrich our organizations.”
Indeed, chief investment officers of leading institutional investors said they would allocate 2.6 times as much capital toward more ethnically and racially diverse private-equity deal teams if they were choosing between two comparable firms, according to a 2022 report from McKinsey.

An opportunity to build wealth

Marc Rowan, CEO of Apollo Global Management, and Marcus Shaw, CEO of AltFinance

AltFinance is also giving students an opportunity to enrich themselves. Alternative investing has boomed since 2000 following the dot-com bubble, according to Preqin. Further, employee compensation in the industry can be lucrative, even as new graduates embark on their careers.

In 2020, the average base salary for associates — an entry-level position — at private equity firms was $137,000, according to data from executive search company Heidrick & Struggles.
“It’s the potential to grow generational wealth,” Howard University sophomore Brittany Clark told CNBC, “Personally, from my background making six figures out of college is unheard of, so when I talk about it with my parents it’s shocking.”

“Coming from humble beginnings myself, I didn’t know much about alternatives or finance or the jobs and opportunities that are available to me.” said Morehouse College senior Joseph Ramirez. “Now, I’m learning the tools necessary to be able to create generational wealth.”
AltFinance CEO Marcus Shaw said the program’s potential impact goes beyond Wall Street.
“The students that we have in our program were destined for greatness, no matter what path they were going to take.” Shaw told CNBC. “But by giving them an opportunity to look behind the veil and see what lies ahead of them in the career in alternative investments, [it] creates another opportunity for them to build wealth for themselves, their family and their communities. There is a trickle-down effect… that will not only create stronger families for them but stronger communities.”
Ares Management co-founder Antony Ressler and Apollo Global Management CEO Marc Rowan both said the fellowship has the potential to increase representation in the industry in the near term and profits for the firms in the long term.
“We are a culture of finding that which is not well understood,” Rowan told CNBC. “And increasingly that comes from having diverse points of view at the table, and diverse backgrounds and diverse ways of looking at things and then diverse ability to develop [and] deliver a message to a diverse set of clients.”
“The more perspectives you have, the better the investor you are.” Ressler told CNBC. “So the idea of being a more diverse company, for us is a positive. It’s good for business. It’s good for our investment decisions. It’s good for our employee base. And it’s precisely what we think we should be doing.”

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A look at the latest consumer price index inflation data shows, in many cases, the cost of going places is still high.
Gas prices rose in January, contributing to a higher inflation print for the month.
Meanwhile, other categories, including airfares and new cars, have risen in the past year.

A gas station in Arlington, Virginia.
Xinhua News Agency | Xinhua News Agency | Getty Images

New government data for January shows high inflation has continued into the new year.
That has some economists worried high prices may prove to be sticky, even as the Federal Reserve works to slow inflation by raising interest rates.

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Yet as some prices climbed, others subsided, according to the January consumer price index data released by the U.S. Bureau of Labor Statistics on Tuesday. The CPI measures changes in consumer prices by measuring a basket of goods and services over time.
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Transportation costs were one area where prices were in flux.
Notably, a jump in gasoline prices was one of the contributors to an overall 0.5% increase in the CPI for the month. Gasoline rose 2.4% in January, while it fell 7% the previous month.
Yet looking back at the past 12 months, gasoline – at 1.5% – did not make the list of top costs. (The benchmark inflation for all items came it at 6.4%.)

Meanwhile, fuel oil dipped 1.2% in January but was up 27.7% for the past 12 months.
While high gas prices made headlines in 2022, prompting gas tax holidays in some states, those prices have subsided from last year’s highs.
The national average for a gallon of gas is $3.42, AAA reported on Thursday, up a penny from the previous week. The highest recorded average price was $5.02 as of June.
Gas prices “did rise in January and that was mostly due to the weather,” said Andrew Gross, spokesperson at AAA. Winter storms affected refineries on the Gulf Coast and in California. Separately, a weather-unrelated fire at a Colorado refinery is also causing problems.

Oil prices also influence about 60% of what consumers pay at the pump, according to Gross.
January’s jump in gas prices is one example of how the slowing inflation — or disinflation — will not necessarily happen in a “straight line,” according to Brett House, professor of practice in economics at Columbia Business School.
“You have the potential for exogenous shocks or economic shocks that are coming out of the blue that don’t have an economic underpinning to them … knocking prices for substantial changes in any given month,” House said.

Other transportation costs are in flux

New vehicles are up 5.8% over the past 12 months ending Jan. 30, and up 0.2% for the month.
However, used cars and trucks, a category that surged during record high inflation, are now down 11.6% for the past 12 months and down 1.9% for January.
Other transportation categories that were up over the last 12 months include airfares, which climbed 25.6%; motor vehicle repairs, which rose 23.1%; public transportation including airfares, up 17.1%; and motor vehicle insurance, up 14.7%.

Car insurance has been increasing as insurance companies reprice policies to reflect higher prices for parts, noted Nikolai Roussanov, a finance professor at the Wharton School at the University of Pennsylvania.
Other trends, like rising vehicle costs, higher accident rates during the pandemic and poorer returns on premiums invested in the market by insurance companies, may also be factors, according to Peter C. Earle, an economist at the American Institute for Economic Research.
However, there were some signs higher prices in certain categories may be subsiding, based on data for the month of January. Airfares were down 2.1% for the month, on a seasonally adjusted basis. Yet lodging away from home, including hotels and motels, was up 1.5%.

Persistent high inflation in services may continue to push up certain travel costs, according to House.
Strong demand for travel now that Covid-19 restrictions have lifted has also affected prices, House noted.
“People are not spending or emphasizing as much spending on goods as we’ve seen previously,” House said. “People are investing in experiences, getting out, going to cultural things, travel.”

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Craig Stowell loves what he does for a living. He gets to follow his passion and go car shopping as a profession.
Stowell owns Flying Wheels, a car dealership in Danville, New Hampshire. The business, which is valued at an estimated $3 million, buys about 80% of its cars at auctions around the country. For him, it’s retail therapy.

“I never know what I’m going to come home with and that’s half the thrill, half the fun,” he said.
In 2022, the U.S. vehicle auction market was valued at $3.21 billion. More than 9 million cars are sold at auctions around the U.S. every year, according to the National Auto Auction Association.
Flying Wheels reached nearly $1.3 million in sales last year. A typical month brings in about $120,000 in sales. Many of those sales come from Stowell’s online followers on YouTube and other social media.
Stowell has purchased as many as 10 vehicles at a single auction, a personal record, but there are days he walks away empty-handed. He says he has lost thousands of dollars making silly mistakes that taught him lessons for the future.
Watch this video to learn how Stowell built his $3 million business buying cars at auctions.

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More Americans are in a bind as inflation forces them to dip into their cash reserves to cover basic necessities.
A few key financial strategies can help.

Inflation is still taking a hefty toll on households, recent reports show.
Prices continued their upward momentum in January, rising 0.5% for the month and 6.4% over the past 12 months, according to the latest consumer price index data released by the U.S. Bureau of Labor Statistics.

To make ends meet, 27% of Americans said they’ve had to take money out of savings and more than half, or 54%, said they used that money to pay for everyday expenses, such as groceries and rent, the recent Country Financial Security Index found. 
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Roughly 64% of Americans are now living paycheck to paycheck, according to a LendingClub report — up from 61% a year earlier and in line with the historic high first hit in March 2020.
“Inflation has shredded household budgets over the past two years, and not just when it comes to one-off discretionary expenses or special occasions, but for keeping up with day-to-day bills,” said Greg McBride, chief financial analyst at Bankrate.com.

Overall, Americans feel less financially secure than they did at the end of 2022, Country Financial also found.

Even though wage growth is high by historical standards, it isn’t keeping up with the increased cost of living.
Average hourly earnings fell 0.2% in January and were down 1.8% from a year ago, according to a separate BLS report that adjusts wages for inflation.

How to stay on track

“There’s a great deal of economic risk right now, and if you’re borrowing from your future or someone else to cover expenses, an economic slowdown could be worse for you than it has to be,” said Howard Dvorkin, CPA and chairman of Debt.com.
Experts often recommend starting with a basic budget. “With utilities, rent and food all at record-time highs, anywhere you can plug a budget leak will help you increase your cash flow,” Dvorkin said, especially when it comes to high-interest debt.

Credit card rates, in particular, are now near 20%, on average — a record. Those annual percentage rates will keep climbing, too, as the Federal Reserve continues raising its benchmark rate.
If you currently have credit card debt, tap a lower-interest personal loan or 0% balance transfer card and refrain from putting additional purchases on credit unless you can pay the balance in full at the end of the month and even set some money aside.
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Higher prices due to inflation may be contributing to the feeling that an economic downturn is already underway.
Economists say the economy is still strong. However, as the Federal Reserve looks to cool high inflation, that may prompt a recession.
Still, a “soft landing” with fewer job losses is possible, one expert says.

A shopper browses meat department at a Los Angeles supermarket on Feb. 13, 2023 in Los Angeles.
Mario Tama | Getty Images News | Getty Images

Why periods of disinflation often lead to a recession

The higher-than-expected January inflation data prompted some concerns that disinflation, defined as slowing inflation rates, had been put on pause.

“We are still on the path to lower inflation rates,” House said.
While headline inflation will continue to come down, it’s “not a straight line,” he said.
The Federal Reserve is expected to continue to raise interest rates. The difficulty the central bank faces is whether it can execute a soft landing.

“There are far more cases where disinflation brought about by interest rate increases by the Fed have led to a recession than not,” House said.
Economists said they still expect a recession following the new January inflation data. The question is just how severe a downturn may be.
“We are still expecting a recession for now, but it is going to be very tricky,” Eugenio Aleman, chief economist at Raymond James, said Tuesday following the release of the January CPI data.
The service sector of the economy needs to slow down further, Aleman noted. But the Federal Reserve lacks tools to prompt that area to cool off, he said.

The door to a soft landing is rapidly closing.

Peter C. Earle
economist at the American Institute for Economic Research

By raising interest rates, the Federal Reserve is also trying to make it more attractive for consumers to save rather than spend, according to Aleman. However, the challenge is reversing spending patterns that have been in place for the past 20 years, he said.
The new CPI data prompted Peter C. Earle, an economist at the American Institute for Economic Research, to say he thought a recession was more likely.
The new data shows slowing disinflation, he said, while the Federal Reserve will probably have to hold rates higher for longer. Moreover, slowing economic growth may accelerate.
“The door to a soft landing is rapidly closing,” Earle said.

A ‘Goldilocks scenario’ could bring a soft landing

There is still hope, however, that the central bank may execute a so-called “soft landing,” according to House.
The unemployment rate is at 3.4%, the lowest since May 1969, according to the latest jobs report. Meanwhile, there are a record number of job openings, which increased to 11 million as of December.
The hope is that there will be an elimination of those open vacancies rather than an elimination of existing jobs, House said.

“We have some evidence that we’re simply seeing some of those job postings get pulled out, rather than people being laid off,” notwithstanding cuts in the technology sector, House said.
There is a big pool of unfilled jobs that could simply be pulled out of the labor market without putting people out of work, he said.
“That would be the kind of Goldilocks scenario that could get us to a soft landing,” House said.

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The Biden administration is moving to create a new way for borrowers to repay their federal student loans.
Some bills could be cut in half under the program.

Pablo Rasero | Istock | Getty Images

What is the new plan called?

The new option would change one of the four current income-driven repayment plans that limit borrowers’ bills at a share of their discretionary income.
Instead of paying 10% of their discretionary income a month on the Revised Pay As You Earn Repayment, or REPAYE, Plan, borrowers would be required to pay just 5% toward their undergraduate student loans.

Currently, after 20 years of payments on undergraduate student loans, any leftover debt is forgiven on the existing REPAYE Plan. The revised option preserves that timeline.
However, under the Biden administration’s proposal, those with original student loan balances of $12,000 or less may get their loans forgiven after just 10 years.

How would payments change?

Under the current REPAYE Plan, discretionary income is calculated as money earned over 150% of the federal poverty guideline. As a result, single borrowers begin to make payments based on income over roughly $21,900, based on 2023 guidelines, said higher education expert Mark Kantrowitz.
Under the new plan, borrowers wouldn’t need to make payments based on income earned until it hit 225% of the federal poverty guideline, or about $32,800, Kantrowitz said.
He provided an example of how monthly bills could change with the overhauled option.

Previously, a borrower who made $40,000 a year would have a monthly student loan payment of around $151. Under the revised plan, their payment would drop to $30.
Someone who earned $90,000 a year, meanwhile, could see their monthly payments shrink to $238 from $568, Kantrowitz calculated.
And those who earn under around $32,800 will have $0 monthly payments.

Who qualifies?

The new option should be available to borrowers with undergraduate and graduate student loans, although undergraduate borrowers will have lower payments. Those with Parent Plus loans won’t be eligible to enroll in the overhauled plan.
Defaulted loans are typically ineligible for income-driven repayment plans. Yet under the new proposal, those who have fallen behind may be able to sign up for the Income-Based Repayment, or IBR, Plan, another one of the income-driven repayment plan options.

When could the plan be available?

The new REPAYE Plan could officially be available July 1, 2024, according to Kantrowitz. But some parts of the plan could be implemented sooner, he said.

How can I sign up?

Once the new REPAYE Plan is available, borrowers can call their student loan servicer to enroll in the option, or apply at StudentAid.gov.
“Any new plan will likely take quite some time to implement, so borrowers will have plenty of time to learn about how it might work,” said Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade group for federal student loan servicers.

Is the forgiven debt taxable?

It’s unclear whether debt forgiven at the end of the repayment timelines will be taxable at the federal level.
Debt forgiveness used to trigger a tax bill under income-driven repayment plans. But a recent law ended that policy until at least 2025, and experts believe it could become permanent.
It’s also possible that some states will consider the forgiven debt taxable.

What’s going on with the payment plan pause?

The Covid pandemic-era relief policy suspending federal student loan bills and the accrual of interest has been in effect since March 2020. 
For now, the Education Department is leaving things a little open-ended when it comes to the timing of payments resuming.
It has said the bills will be due again only 60 days after the litigation over its student loan forgiveness plan resolves and it’s able to start wiping out the debt.
If the Biden administration is still defending its policy in the courts by the end of June, or if it’s unable to move forward with forgiving student debt by then, the payments will pick up at the end of August, it has said.
The Supreme Court will start hearing arguments on legal challenges to the plan Feb. 28.

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Charlie Munger, a shareholder and board member for The Daily Journal, is set to speak at the newspaper’s virtual annual meeting Wednesday.
Munger stepped down from his chairman title at the Los Angeles-based Daily Journal last year. The 99-year-old investor also donated $1 million of stock to create an equity-incentive plan at the company at the time.

Daily Journal’s annual meetings typically feature hours of Q&A with Munger, drawing attention from investors and admirers around the globe. The famed investor could touch on a wide range of topics, from market volatility, the Federal Reserve’s rate hikes, to cryptocurrencies and investing in China.
Munger is also the vice chairman of Berkshire Hathaway and a longtime business partner of Warren Buffett. He recently penned an op-ed in the Wall Street Journal, urging the U.S. to follow in China’s footsteps and ban cryptocurrencies.
The event, moderated by CNBC’s Becky Quick, is slated to begin streaming exclusively on CNBC at 1 p.m. ET.

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Daniel Swan started as an apprentice and now works full time as an HVAC technician in California.
Apprenticeship programs are becoming more popular as an alternative to college.
Over a decade, the number of registered apprentices rose 64%, according to the latest data from the U.S. Department of Labor. 

Daniel Swan, 26, started as an apprentice and now works full time as an HVAC technician in California.
Courtesy: Lee’s Air

For Daniel Swan, a 26-year-old father of two, it was simply a means to a well-paying job during an uncertain time.
Armed with a technical degree, Swan joined an apprenticeship program with Lee’s Air in Fresno, California, in 2019. His family fully supported the decision to forgo college. “It was more ‘be successful at whatever you do,’” Swan said of his parents’ attitude at the time.

Now, he works as a skilled technician in heating, ventilation and air conditioning, or HVAC. Although Swan still hopes to get a degree in architecture one day, “I’m in a good place,” he said.
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Increasingly, young adults are rethinking the value of college.  
Amid the heightened demand for workers, rising cost of tuition and growing student loan burden, more would-be students are choosing career-connected pathways over four-year colleges, according to recent reports.
As enrollment falls, alternatives such as apprenticeship programs are quietly gaining steam, particularly for families anticipating the sticker shock of a college education, which currently averages around $53,430, including tuition, fees and room and board, at private colleges and $40,550 at public colleges for the 2022-23 school year, according to the College Board.

‘We are a societal turning point’

“We are a societal turning point,” said Hafeez Lakhani, founder and president of Lakhani Coaching in New York. “People at the margin are saying ‘I don’t know if I can wait four years to make a living.’”
Some experts say the value of a bachelor’s degree is fading and more emphasis should be directed toward career training. A growing number of companies, including many in tech, are also dropping degree requirements for many middle-skill and even higher-skill roles.
However, earning a degree is almost always worthwhile, according to “The College Payoff,” a report from the Georgetown University Center on Education and the Workforce.

Companies that have these programs have a huge advantage because we can create the labor.

Tom Howard
owner of Lee’s Air

Bachelor’s degree holders generally earn 84% more than those with just a high school diploma, the report said — and the higher the level of educational attainment, the larger the payoff.

Apprenticeships are on the rise

In an apprenticeship program, a company generally trains a student in one skill for a specific field. That often leads to a job, sidestepping the traditional college path — and costs.
Over a decade, the number of registered apprentices rose 64%, according to the latest data from the U.S. Department of Labor. 
For Tom Howard, the owner of Lee’s Air, the program was meant to address a growing labor shortage. “The reality is, as air conditioning and plumbing companies, we are desperate for labor,” Howard said. “It’s a massive problem.”

Lee’s Air covers the cost of training and supplies and matches apprentices with full-time jobs at the company. Once workers complete the program, “we have a pretty high retention rate,” he said.
Now apprenticeships are becoming more mainstream across the industry, Howard added. “Companies that have these programs have a huge advantage because we can create the labor.”
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