I'm trying to make it so the white area (the N) is transparent and cuts a hole over the star image to reveal the black background behind it. I'm using Photoshop.
You should use a mask, see Adobe's quick overview on mask layers here: https://helpx.adobe.com/photoshop/using/masking-layers.html
Basically you use the selection of the text layer to 'mask' or hide parts of the star background. This mask can be modified later and it helps if you want to change the black background eventually.
I made this quickly to show you what I'm talking about (Apologies for the ancient version of Photoshop.)