SoFi Predicts Six More Months of Student Loan Moratorium Ahead of Official Word From Biden
With no word yet from the White House on an official extension to the student loan payment moratorium and the September 1 repayment start-up date quickly approaching, lenders have no choice but to go ahead and assume that students will begin repaying their outstanding loans at the start of next month.
Speaking at a SoFi earnings call last week, CEO Anthony Noto provided an update on his company’s demonstrated resiliency and SoFi’s “ability to deliver another quarter of record revenue.” However, as Business Insider reports, it was his company’s CFO who said what everyone was thinking.
“Our outlook also assumes the federal student-loan payment moratorium will last until January 2023, which would result in a late Q4 2022 benefit based on the trend experienced in 2021,” said Chris Lapointe, SoFi’s chief financial officer, during the call.
SoFi, one of the biggest private lenders, has previously lobbied Congress to resume student-loan payments and in March, Noto wrote a blog post entitled “Our Recommendation for President Biden” addressing the repayment issue.
“If the government needlessly extends the broad moratorium for a fourth time, not only will it add to the country’s inflation woes and unnecessarily give 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.
In response to the COVID-19 pandemic, President Joe Biden extended the student loan payment moratorium in April, to August 31, 2022. Most federal student loans and their interest rates have been paused since March 2020.
Student loan forgiveness has been a hot topic throughout 2022 but discussions intensify whenever the latest federal student loan moratorium nears its end date. According to a White House brief, Biden has promised a decision on student loans “by the end of August,” but until that happens, expect intense debate to ramp up about what to do with the 44 million Americans burdened with $1.7 trillion in student loan debt.
In June, the Biden administration was in the process of finalizing details to announce sweeping federal student loan forgiveness legislation. As CNBC reported, the president wanted to spend $321 billion to forgive $10,000 from each student’s loan and completely eliminate a third of all current student loans. Since then, there has been relative silence on the matter.
Many Democrats and loan forgiveness advocates would like to see Biden extend payment obligations until the end of the year at least. Most, however, want a more substantial elimination of loans and unprecedented reform to the existing federal student loan system.
Most Republicans and financial lenders oppose a further extension and a revamped student loan forgiveness system, claiming the moratorium, as Sen. Tom Cotton (R-Ariz.) tweeted back in April, “is an insult to every American who responsibly paid debts,” per The Daily Mail.
When he was campaigning as a presidential candidate, Biden promised to cancel $10,000 worth of student loan debt per borrower. Whether the president will continue to delay delivering on that promise will soon be known. Whichever direction he decides to act, you can bet that for many, it won’t be the right one.
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