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Dear SOFI Stock Fans, Get Ready for Biden to Tackle Student Loans

Investor Place · 07/27/2022 12:54

During the first quarter, student loan origination volume accounted for 29.6% of SoFi’s total origination volume. Besides student loans, the fintech provider also transacts in personal and home loans.

SoFi will report Q2 earnings on Aug. 2. Meanwhile, the Biden administration is signaling it may be nearing a decision to extend the moratorium. Forbes  suggests that recent reports show Biden may extend the moratorium to until at least the end of the year, and possibly until the summer of 2023.

Let’s get into the details.

SOFI Stock in Spotlight Amid Potential Student Loan Moratorium Extension

Earlier this week, the Education Department notified its contracted student loan companies to not send out billing notices to borrowers. This is on top of previous statements made by administration officials who stated borrowers would have sufficient time to prepare before billing resumes. This notice has increased speculation that the moratorium will be extended again.

According to people familiar with the situation, Biden is mulling also forgiving $10,000 of student loan debt per borrower. This would come ahead of the November midterm elections in an attempt to resonate with younger voters. However, he still has not made a final decision on either the moratorium extension or student debt forgiveness.

White House Press Secretary Karine Jean-Pierre explained:

“As far as [student] loan cancellation, [President Biden] understands what this means for families, how burdensome this can be. He said himself, by the end of August, so that’s right around the corner … He’ll make a decision.”

Meanwhile, Biden seems to only support forgiveness for lower-income borrowers.  Bloomberg reports he is likely to extend forgiveness for borrowers making less than $125,000 per year. It appears Biden is on the same page as CEO Anthony Noto, who stated he supports a $10,000 debt forgiveness for “distressed and defaulted borrowers.”  On the other hand, Noto supports putting the “affluent and capable” back into repayment.

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com  Publishing Guidelines.

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