SoFi Bank has filed a lawsuit asking a federal judge to overturn President Joe Biden’s latest extension of the student loan debt payment pause.
According to the suit, the latest pause on federal student loan debt has no legal basis and has cost the bank at least $6 million of dollars in profits, The Washington Post reported.
Student loan payments first were paused by former President Donald Trump’s administration as the COVID-19 pandemic was declared in March 2020, and people were unable to work.
Trump extended the pause in payments twice, while Biden has extended the pause six times.
Federal student loan payments have been paused for around 43.5 million borrowers since March 2020.
“We have supported and continue to support targeted student loan forgiveness, in addition to the student loan payment moratorium during the economic crisis at the height of the COVID-19 pandemic. However, it’s time for the administration to follow through on its word to end the federal student loan payment moratorium. This latest extension is an illegal overreach,” SoFi said in a statement to The Washington Post on Monday.
The suit goes on to argue that there is not a valid reason authorized by the HEROES Act, the federal law the Biden administration has invoked to continue the pause, The Associated Press reported.
“The eighth extension does not even attempt to redress harm from the pandemic at all, but rather to alleviate ‘uncertainty’ caused by the debt-cancellation litigation,” SoFi said of the suits brought against the administration since the debt forgiveness plan was announced.
In addition, the bank argued the extension violated the Administrative Procedure Act because the administration failed to invite feedback from the public on pausing loan payments.
The Department of Education said Monday that having borrowers repay the loans they took out now could lead to “financial harm.”
“This lawsuit is an attempt by a multibillion-dollar company to make money while they force 45 million borrowers back into repayment — putting many at serious risk of financial harm,” the department said in a statement.
Biden proposed a plan in August to cancel $10,000 in federal student loan debt for those making less than $125,000 a year, or households making less than $250,000. Pell Grant recipients will be eligible for an additional $10,000 in debt forgiveness.
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