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SoFi files suit in federal court to end student loan payment pause. [1]

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Date: 2023-03-06

For full disclosure, my student loans were forgiven in January through the Public Service Loan Forgiveness program, as I wrote here on Daily Kos. Whatever happens with SoFi's lawsuit, I will not be impacted by it, though I know people who will be.

That said let's get down to it, shall we?

Student loan refinancing company SoFi filed suit in the D.C. District Court today, seeking to end the moratorium on federal student loan repayments. SoFi is a private company that makes money in part by offering borrowers the opportunity to refinance their loans at a lower rate than the federal government offers.

Their suit is based on the idea that it is unfair for them to have to compete with 0% loans due to the moratorium, and they claim that they have lost $300-400 million in revenue since the payment pause started in 2020. They are seeking either to end the payment pause, or barring that only keep it in place for those eligible for forgiveness. The moratorium is scheduled to end at the end of June, or when the SCOTUS rules on the legality of Biden's general loan forgiveness program.

So there's the facts of the matter. Now for my opinion.

I find this action by SoFi to be reprehensible. It is basically seeking to force borrowers to start repaying their loans while they are waiting on the SCOTUS to decide on loan forgiveness, many of whom would see their loans vanish entirely if the forgiveness goes through.

And SoFi's claim that they have suffered harm by the pause being extended is not believable. This is not revenue they lost, but revenue they expected to get and did not. And based on their own legal argument, they are only filing suit now because the latest extension was based on seeking to alleviate uncertainty rather than to help borrowers hurt by the pandemic.

In short, this is entirely about forcing many borrowers to immediately continue repaying their loans so SoFi can profit from offering lower rates than the federal government again.

I won't be affected by this as I said at the beginning, but as far as I'm concerned SoFi just demonstrated why nobody has any business profiting off if student loans. And it's not as if they're destitute; they earn money by many other means besides offering student loans. With this last pause scheduled to end in less than four months, and the unlikeliness of the Biden administration extending it further, this is not only unnecessary but outright cruelty - seeking to inflict repayment on tens of millions of student loan borrowers a few short months before it would have ended anyway, merely so they have the opportunity to start profiting off of them again.

I don't use SoFi for anything, and this latest news ensured I never will.

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[1] Url: https://www.dailykos.com/stories/2023/3/6/2156642/-SoFi-files-suit-in-federal-court-to-end-student-loan-payment-pause

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