SoFi stock fell 10% on Thursday after the Biden administration extended the freeze of student loan payments.- The freeze was set to expire on May 1, but has instead been pushed back to August 31.
SoFi said it expects an additional loan payment freeze to occur beyond August 31 as the midterm elections approach.
SoFi stock fell as much as 10% on Thursday after the Biden administration extended its freeze of student loan payments to August 31.
The freeze in student loan payments was set to expire on May 1. The freeze was originally implemented during the height of the COVID-19 pandemic in March of 2020, as a form of relief for consumers who were struggling economically.
Due to the extension of the loan payment freeze, SoFi lowered its full-year 2022 adjusted net revenue and adjusted EBITDA guidance to $1.47 billion and $100 million, respectively. The company had originally guided for $1.57 billion and $180 million in 2022 adjusted net revenue and adjusted EBITDA.
SoFi maintained its original guidance of $280-285 million adjusted net revenue and $0-5 million adjusted EBITDA for the first quarter of 2022.
SoFi receives a lot of business from student loan refinancing, but that's a key product that consumers don't really need as long as the payment freeze remains in place. SoFi's student loan refinancing business has operated at less than 50% of pre-COVID levels for the past two years, according to the company.
While SoFi gains new customers by helping them refinance their
And SoFi doesn't expect the student loan payment freeze to end on August 31, given the upcoming midterm elections.
"Management now expects that a number of factors including the impending fall midterm elections will precipitate a likely seventh extension beyond August 2022 by the Administration. Accordingly, Management's updated 2022 guidance assumes that the student loan moratorium will not in fact end during the course of 2022," SoFi said.