A private bank is trying to force the Biden administration to end its pause on federal student loan payments, arguing the moratorium has no legal basis and has cost the bank, known for its refinancing business, millions of dollars in profits.
In a federal lawsuit filed Friday in Washington, SoFi Bank N.A. asked a federal judge to overturn President Joe Biden’s latest extension of the payment pause. Student loan payments first were halted at the start of the pandemic by President Donald Trump’s administration. The pause has been extended eight times over three years.
Unlike the first seven extensions, which were meant to help borrowers struggling as a result of the pandemic, the latest one was enacted solely in response to legal challenges to Biden’s plan for widespread student debt forgiveness, the lawsuit says. The plan is currently being challenged in the Supreme Court, which is expected to rule by June.
The most recent extension has cost the bank at least $6 million in lost profits, SoFi says, and it could lead to a total of $30 million in losses if it continues through August. “The department will continue to fight to deliver relief to borrowers, provide a smooth path to repayment and protect borrowers from industry and special interests,” the agency said in a statement.
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