- In March, SoFi Bank filed a lawsuit to end the latest extension of the student-loan payment pause.
- Sen. Warren and Rep. Pressley sent a letter to SoFi CEO Anthony Noto requesting information on the profits the company could gain should the lawsuit prevail.
Elizabeth Warren and Ayanna Pressley want a major student-loan lender to answer to the millions of borrowers it's trying to block from getting student-debt relief.
In March, SoFi Bank — a student-loan refinancing company — filed a lawsuit against President Joe Biden's Education Department to end the latest extension of the student-loan payment pause, and at the very least, return borrowers ineligible for Biden's broad student-debt relief plan back into repayment.
In November, two conservative-backed lawsuits halted Biden's plan to cancel up to $20,000 in student debt broadly for federal borrowers, leading Biden to extend the pause 60 days after June 30, or 60 days after the Supreme Court issues a final decision on the legality of the relief, whichever happens first.
SoFi argued in its complaint that it has suffered revenue loss from the continued payment pause, and the latest extension was a result of the lawsuits, not pandemic hardship.
But Sen. Warren and Rep. Pressley aren't convinced. They sent a letter to SoFi CEO Anthony Noto on Wednesday — exclusively viewed by Insider — to request information on the amount of revenue the company would gain should the payment pause end, writing that SoFi "is actively working to harm millions of people with federal student loan debt."
"Indeed, your company has thrived during the pandemic payment pause, and you have been richly rewarded. You were paid a whopping nearly $103 million in 2021, and your company's four other highest-paid executives made over $70 million combined," the lawmakers wrote. "SoFi's attempt to end the student loan payment pause and force millions of Americans into repayment while raking in massive revenues and handing out huge executive paychecks represents corporate greed at its worst."
"SoFi's lawsuit against ED is a dangerous and cynical ploy to prevent millions of borrowers from obtaining relief," they added. "It not only contradicts its stated values, but threatens your own customers and millions of other Americans."
Warren and Pressley asked Noto to respond to a series of questions by April 18, 2023, including how much additional earnings and profits SoFi would make should its lawsuit prevail, total compensation for the top executives at the company, and how it has communicated the terms of its refinancing products with borrowers that could make them ineligible for federal relief.
As SoFi wrote in its legal filing, it has refinanced over $30 billion student loans for over 450,000 borrowers since 2012, and it said it "competes with the federal government for federal student loan borrowers by offering them private financing under more favorable terms."
It also said it has lost about $300 to $400 million in total revenues "as a direct result of the moratorium." As Insider previously reported, though, the Consumer Financial Protection Bureau raised the alarm on student-loan companies offering refinancing products because it could strip a borrower of federal benefits under the guise of more favorable repayment terms.
Additionally, as Warren and Pressley referenced, the lawsuit was not entirely unexpected — Noto said in February that the latest payment pause extension will "subsidize people that don't need it."
"We should absolutely fund those people that need the help," he said. "We should forgive those people that need the help. But those that are capable of paying need to be put back into payment, and they shouldn't have their loans forgiven either."
Biden's Education Department slammed the lawsuit, saying in a statement after it was filed that it's "an attempt by a multi-billion dollar company to make money while they force 45 million borrowers back into repayment – putting many at serious risk of financial harm."
"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," it said.