Student-Loan Lender SoFi Seeks To End Payment Pause, Return Borrowers To Repayment

Student-loan lender SoFi filed a complaint

Student-loan lender SoFi has filed a complaint in a federal court requesting that President Joe Biden’s student-loan payment pause be terminated.

At the very least, the lender wants borrowers ineligible for Biden’s broad debt relief to resume repayment, MSN reported. Student-loan lender SoFi argues that it has been directly harmed by the latest extension due to revenue losses from refinancing.

SoFi Bank and SoFi Lending Corp
Student-loan lender SoFi Bank and SoFi Lending Corp, a company that specializes in refinancing student loans, lodged a legal complaint in the District Court for the District of Columbia on Friday, requesting that President Joe Biden’s recent extension of the student-loan payment pause be declared null and void. (Photo: Bloomberg News)

The lawsuit comes after two conservative-backed lawsuits paused Biden’s $20,000 student-loan forgiveness plan. Biden extended the student-loan payment pause through 60 days after June 30 or 60 days after the Supreme Court issues a decision on the legality of the relief, whichever happens first, in response to the legal challenges. The Supreme Court heard oral arguments in the cases last week.

Student-loan lender SoFi claims that the latest extension of the payment pause was “unlawful on multiple grounds.” The lender also stated that the Education Department did not follow proper procedure through the Administrative Procedure Act’s notice-and-comment period to extend the payment pause.

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In its complaint, Student-loan lender SoFi argued that Biden does not possess the power to keep prolonging the student-loan payment pause under pandemic relief, utilizing the HEROES Act of 2003. The law provides the Education Secretary with the capability to modify or waive student-loan balances in association with a national emergency such as COVID-19, Business Insider reported.

Student-loan lender SoFi detailed how it has been harmed by the additional payment pause extension, claiming that it has lost about $300 to $400 million in total revenues “as a direct result of the moratorium.” SoFi CEO Anthony Noto has expressed his belief that it’s time for borrowers to reenter repayment.

Meanwhile, a debtor’s union advocating for debt cancellation, the Debt Collective, criticized Student-loan lender SoFi, calling it a “parasite on a policy failure.” The group has been advocating for the Department of Education to cancel all federal student loans.

Biden’s administration has not yet responded to Student-loan lender SoFi’s complaint. The fate of the student-loan payment pause remains uncertain as the Supreme Court deliberates on the legality of Biden’s debt relief plan.

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