Student lender SoFi expects Biden to extend payment break again

  • Leading student loan refinance company SoFi expects student loan payments to remain suspended until 2023.
  • Its chief financial officer expressed this assumption during an earnings call in early August.
  • SoFi has already lobbied Congress to resume paying student loans.

A major private lender might not want President Joe Biden to continue extending the student loan payment break – but thinks it will happen anyway.

On Tuesday, SoFi — one of the largest student loan refinance companies — held its second-quarter earnings call to discuss the company’s situation two years into the pandemic. SoFi CEO Anthony Noto said on the call that the second quarter results “demonstrate the continued resilience of our team and our business and our ability to generate another quarter of record revenue,” but Regarding the student loan segment, there is still uncertainty after the more than two-year pandemic pause on payments.

Borrowers and lenders are awaiting advice from Biden on whether payments will resume as planned after August 31, and while there is speculation of another possible extension after the Department of Education ordered companies to ready to suspend messages surrounding the refund, the president has yet to give final word. But SoFi predicts that borrowers will have another six months of relief.

“Our outlook also assumes that the federal student loan payment moratorium will last through January 2023, which would result in a benefit at the end of the fourth quarter of 2022 based on the trend seen in 2021,” the CFO said. of SoFi, Chris Lapointe, on the call.

SoFi was among several lenders lobbying Congress in March to resume student loan payments. They argued that another extension of the payment pause would be “unnecessary” as borrowers were doing better financially than they were at the start of the pandemic, and Noto also wrote in a blog post separate that borrowers are “paralyzed by uncertainty” and that Biden should put the “well-off and able” borrowers to resume repayment.

“If the government unnecessarily extends the broad moratorium for a fourth time, not only will it add to the country’s inflation woes and unnecessarily hand over to the wealthy who are willing and able to repay their debts, but it will severely disrupt people’s ability to make long term financial plans,” he wrote.

Scott Buchanan, executive director of the Student Loan Servicing Alliance — a trade group that represents federal student loan servicers — previously told Insider that at this point loan companies are gearing up to resume payments on September 1 because that they have not been told otherwise.

“We need to communicate with borrowers. We should have done that a month ago,” Buchanan said. “And it has to happen. At this point, until the White House gives different guidance, payments resume September 1.”

Either way, Democratic advocates and lawmakers are pushing for Biden to extend the pause and cancel student debt, as he is reportedly considering $10,000 relief for borrowers earning less than $150,000 a year. In late July, 107 Democratic lawmakers wrote to Biden asking for another extension because “gas prices are still high and many borrowers still have to pay exorbitant amounts each week to get to work.”

“Resuming student loan payments would force millions of borrowers to choose between paying their federal student loans or putting a roof over their heads, food on the table, or paying for child care and health care. healthcare – as costs continue to rise and yet another COVID-19 variant increases hospitalizations nationwide,” they wrote.

Dorothy H. Lewis