SoFi Withdraws Lawsuit to End Student Loan Payment Pause
Credit: Image Credit: Davide Bonaldo / LightRocket / Getty Images- California-based SoFi Bank is no longer interested in ending the student loan payment pause through the court system.
- This comes after a recent debt ceiling deal cemented an end to the payment freeze on August 29.
- Most borrowers have not needed to make a payment on their loans since March 2020.
SoFi Bank has decided that its lawsuit seeking to end the pause on federal student loan payments is no longer necessary.
The California-based bank on Monday filed to withdraw its lawsuit seeking to end the pause. SoFi stated in the filing that after meeting with the Department of Education (ED), both sides agreed that the lawsuit is no longer relevant due to the recent passage of the Fiscal Responsibility Act of 2023.
That bill raises the debt ceiling, which prevents the U.S. government from defaulting on its loans. As part of a compromise with Republican Speaker of the U.S. House of Representatives Kevin McCarthy, President Joe Biden included an end to the three-year-long pause on federal student loan payments.
Biden signed the bill into law on Saturday, meaning the payment pause will now end on Aug. 29.
SoFi is a leader in student loan refinancing, which allows borrowers to refinance loans into a single loan, potentially at a more favorable rate.
The bank filed a lawsuit in federal court last March, alleging that ED’s eighth extension, issued in late last November, was unlawful. According to that filing, SoFi has lost more than $300 million in total revenues from its federal loan refinancing business since the moratorium on payments went into effect in March 2020.
Now that an end to the payment pause is solidified, the corporation appears to see no point in continuing the lawsuit.
“The parties have met and conferred and agree that, in light of the Fiscal Responsibility Act of 2023, this matter should be dismissed without prejudice,” SoFi wrote in its latest filing.