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SoFi sues to block Biden's student loan repayment pause

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Posted at 10:54 AM, Mar 07, 2023
and last updated 2023-03-07 12:15:59-05

The private lending and loan refinancing company SoFi is asking a federal judge to halt President Joe Biden's student loan repayment moratorium.

SoFi Bank N.A. filed a federal lawsuit in Washington Friday, saying the payment pause has no legal basis and has cost the company millions of dollars in revenue and profit.

The Trump administration first halted student loan repayments during the coronavirus pandemic. The moratorium has been extended eight times since then.

The pause was slated to expire at the beginning of the year but was extended while the president's student debt cancellation plan is litigated at the Supreme Court. A ruling is expected by June.

SoFi argues that the most recent extension "does not even attempt to redress harm from the pandemic at all, but rather to alleviate 'uncertainty' caused" by President Biden's debt-cancellation plan.

The White House has defended the extension, arguing that Americans continue to feel the financial strains of the pandemic even as the national health emergency fades.

SoFi claims the most recent extension has cost the company up to $8 million in lost profits, which could reach $30 million by the time the moratorium expires in August.

"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," the lawsuit says.

The Education Department has defended the legality of the moratorium extension, saying it "will continue to fight to deliver relief to borrowers, provide a smooth path to repayment and protect borrowers from industry and special interests."