SoFi Bank is suing to block Biden’s student loan pause
WASHINGTON – A private bank is trying to force the Biden administration to end theirs Pause on federal student loan paymentsthe moratorium has no legal basis and has cost the bank, which is known for its refinancing business, millions in profits.
In a federal lawsuit filed Friday in Washington, SoFi Bank NA asked a federal judge to overturn President Joe Biden’s recent extension of his payments freeze. Student loan payments were initially halted by President Donald Trump’s administration early in the pandemic. The hiatus was extended eight times over three years.
The bank says its federal student loan refinancing business has suffered because borrowers have no incentive to refinance while payments and interest are deferred. At the very least, the lawsuit asks a judge to limit the pause to only borrowers eligible for Biden’s termination plan.
Biden’s recent extension, which was announced in November and could extend into this summer, is unlawful for “a number of reasons,” the lawsuit states.
Unlike the first seven extensions, which were intended to help borrowers struggling as a result of the pandemic, the most recent extension was issued solely in response to legal challenges to Biden’s plan for widespread student debt relief, the lawsuit states. The planning is currently in progress challenged before the Supreme Courtwhat to expect rule until June.
“The eighth extension does not attempt at all to undo damage from the pandemic, but rather to alleviate the ‘uncertainty’ caused by the debt relief process,” SoFi’s lawsuit reads.
SoFi argues that this is not a valid reason authorized by the HEROES Act, the federal law that the Biden administration invoked to continue the pause. The bank also argues that the extension violated the Administrative Procedures Act because the administration failed to seek feedback from the public.
The latest extension has cost the bank at least $6 million in lost profits, according to SoFi, and could result in losses totaling $30 million if continued through August.
“Essentially, SoFi is forced to compete with 0% interest rate loans where ongoing principal repayment is entirely optional,” the lawsuit reads.
The Department of Education did not immediately comment on the lawsuit.
The lawsuit was quickly condemned by borrower attorneys, who described it as a money robbery at the expense of those struggling with student debt.
“The real story here is the tremendous risk this poses to tens of millions of working people who would never be loaned by SoFi — families across the country who depend on the student loan payment pause to protect them from financial devastation,” he said Mike Pierce, Executive Director of the Student Borrower Protection Center. ___
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https://www.local10.com/news/politics/2023/03/07/sofi-bank-sues-to-block-bidens-student-loan-payment-pause/ SoFi Bank is suing to block Biden’s student loan pause