Washington (CNN) Private lender SoFi sued the Biden administration last week in an effort to end a moratorium on federal student loan payments that has been in effect since March 2020.
The suspension of payments was originally put in place during the Trump administration to help people struggling with the Covid-19 pandemic. The moratorium has been extended eight times. Most recently President Joe Biden in November.
In its legal complaint, SoFi argues the latter The extension is different and illegal because the Biden administration tied the reopening date to pending lawsuits over its proposed student loan forgiveness program. Now before the US Supreme Court.
Currently, the Supreme Court resumes 60 days after it issues its verdict or by the end of August — whichever comes first. The judges heard oral arguments Lawsuits on the Student Loan Forgiveness Program Last week and expected to issue a decision in late June or early July.
“Unlike other extensions, the Department of Education (Education) does not claim that continuing the moratorium is necessary to address harm to borrowers affected by the pandemic,” says Sophie’s complaint, filed in federal district court in Washington, DC.
“Rather, the department insisted that the further extension was intended to remove ‘uncertainty’ for borrowers while the pending litigation regarding the loan cancellation scheme is pending,” it continued.
SoFi is asking the court to at least halt payments to Biden’s ineligible borrowers. Student Loan Forgiveness ProgramIt promises up to $20,000 in loan relief for individuals Low-income borrowers $125,000 a year.
During the moratorium, the government set interest rates for federal student loan borrowers at 0%. With these benefits, borrowers have little incentive to refinance their loans with a lender like SoFi. The bank says it has already lost more than $6 million due to the eighth extension of the moratorium.
The Department of Education maintains that the suspension and the proposed one-time loan cancellation program legally.
“This lawsuit is an attempt by a multibillion-dollar company to make money while forcing 45 million borrowers to repay — many at risk of financial harm,” the department said in a statement sent to CNN on Tuesday.
SoFi is a private bank that refinances federal student loans, offering low interest rates to qualifying borrowers. The company was launched in 2011Originally only Stanford University offered student loan refinancing Graduates. Now, SoFi refinances student loans from most college borrowers and has refinanced more than $30 billion in student loans to more than 450,000 borrowers since 2012. It also offers personal loans and mortgages.
SoFi predicts a loss of $25 million $30 million if paid According to the complaint, the suspension will last until August.
“In addition to the student loan moratorium during the economic crisis at the height of the Covid-19 pandemic, we supported and continue to support targeted student loan forgiveness. However, it is time for the administration to follow through on its word. The federal student loan moratorium is over,” SoFi said in a statement sent to CNN on Tuesday. .