If you are an American living with a lot of student loans you probably don’t need any more bad news right now. Well sorry, it’s inevitable because SoFi, a major student loan refinancing company, has filed a federal lawsuit asking the DC District Court to end the nationwide moratorium on federal student loan payments. The pause on payments, which was instituted during the depths of the pandemic, but keeps being extended by the Biden Administration, has been a saving grace for in-debt Americans who have lost work since the pandemic began in 2020.
Now, SoFi is suing the Department of Education asking that all payments resume, or at the very least, that borrowers who aren’t eligible for financial forbearance start paying their bills back. And now I’m extra glad that, even though SoFi has been sending me mail basically every week for several years offering me all sorts of passionate refinancing promises, I have never responded and supported these weevils. Or, more aptly, as a spokesman for the Department of Education called them, “a multi-billion dollar company… putting many at serious risk of financial harm.”
SoFi is arguing that Biden’s continued extensions to the loan pause period are “unlawful on multiple grounds,” even though there is already an end in sight, and claimed they’ve caused direct harm to its business.
“The Loan Moratorium has directly harmed SoFi’s federal loan refinancing business,” according to the lawsuit, “because the Moratorium suspended payments and interest for federal student loans, and because privately refinanced loans are ineligible for programs and policies applicable to federal student loans, the Moratorium has eliminated the primary benefits of student loan refinancing. In essence, SoFi is being forced to compete with loans with 0% interest rates and for which any ongoing repayment of the principal is entirely optional.”
SoFi alleges that the company has lost between $300 and $400 million (oh boo hoo) “as a direct result of the moratorium,” and that the Biden administration doesn’t have the authority to extend the payment pause through the channels it has been using, namely the 2003 HEROES act.
But some experts on the matter say it’s really bizarre for SoFi to speak up at this point, given that the Supreme Court, last week, already heard arguments on the extremely entwined issue of Biden’s promised $20,000 loan forgiveness. Plus, given the timeline of the promised end of the moratorium (June 2023), the issue of payback is soon to be decided anyway.
“One has to ask what is the point of this lawsuit as the president’s student loan forgiveness plan will be resolved by the U.S. Supreme Court this year one way or another and repayment will restart 60 days later,” Mark Kantrowitz, a student loan expert, told Yahoo Finance. “This lawsuit may soon be rendered moot.”
Is this just another case of big bank CEOs being weird little assholes when they don’t have to be? Survey says likely.
(featured image: Josh Appel on Unsplash)
