- Private lenders are lobbying Congress to resume student-loan payments in May, per Politico.
- Refinancing company SoFi wrote a blog arguing "affluent and capable" borrowers should be put back into repayment.
- It also said Biden should fulfill his $10,000 forgiveness campaign pledge and target relief to those who need it most.
Major private lenders say enough is enough — President Joe Biden should not give federal student-loan borrowers a fourth pause on their debt payments.
Last week, the CEO of SoFi — one of the nation's largest student-loan refinancing companies — wrote a blog regarding student-loan payments. Anthony Noto wrote that the Biden administration has continued to "waffle" on potential student-loan relief, and he recommended that, to give borrowers certainty, Biden should fulfill his campaign pledge to cancel $10,000 in student debt, target the pause on payments only for those in "severe hardship," and put the "affluent and capable" borrowers back into repayment on the expected May 1 resumption date.
"Borrowers today are paralyzed with uncertainty," Noto wrote.
"If the government needlessly extends the broad moratorium for a fourth time, not only will it add to the country's inflation woes and unnecessarily give to the wealthy who are willing and able to repay their debts, but it will severely disrupt people's ability to make long-term financial plans," he added. "American borrowers and future college students need clarity to make long-term financial decisions, but the burden of uncertainty around the future of their student loan debt is making that impossible."
SoFi, along with other private lenders, are taking their efforts to Congress. Politico first reported on Friday that several lenders are lobbying Congress to narrow student-loan relief down to a targeted group of federal borrowers. According to a document obtained by Politico, titled "Back to Normal Means Ending the Student Loan Payment Pause," the lenders argued another extension of the payment pause would be "unnecessary" given that borrowers are better off financially than they were at the start of the pandemic. They also argued that another payment pause will exacerbate inflation and would help wealthy borrowers the most.
Student-loan payments have been on pause for over two years as part of pandemic relief implemented first by former President Donald Trump, and later extended three times by Biden. With the current pause on payments set to expire on May 1, some Democratic lawmakers and advocates have argued that further relief is warranted, and that Biden should not throw borrowers back into repayment until he either implements broad student-loan relief or fundamentally reforms the student-loan industry so it works for every borrower.
But many Republican lawmakers, and conservative advocates agree with SoFi, saying the pause on student-loan payments has hurt taxpayers and should not be extended again.
The cases for and against broad student-loan relief
After White House Chief of Staff Ron Klain told Pod Save America earlier this month that borrowers would be on the hook for some form of relief before payments are set to resume in May, SoFi's Noto wrote on Twitter that "the original intent of the moratorium was great," but since then, it has cost taxpayers $150 billion. He said resuming payments is "the harder right thing to do instead of the easier path of indecision, wasting taxpayer money."
—Anthony Noto (@anthonynoto) March 4, 2022
His argument is one a number of Republican lawmakers have used to criticize broad student-loan relief. Top Republican on the House education committee Virginia Foxx said in January that the student-loan payment pause is "troubling," and broad loan forgiveness would be "a massive mistake." She cited the $150 billion cost to taxpayers that accompanied Biden's additional extension, and similar to what Noto said, she wrote providing a clear timeline for repayment will ease "borrower confusion."
Meanwhile, Democratic lawmakers and experts have been arguing the opposite. Sens. Elizabeth Warren and Chuck Schumer — leaders of the $50,000 student-loan forgiveness proposal — have consistently argued that broad relief would stimulate the economy because it would allow money that would have gone toward monthly payments to be invested elsewhere.
New York Rep. Mondaire Jones recently echoed that sentiment, saying that "Americans who found themselves with disposable income began putting it towards food, car payments, and housing, among other things, actually bolstering the economy in the process."
Still, Biden has not yet commented on further relief so borrowers are still on track to begin payments again in May. And as Insider previously reported, student-loan companies have spent millions of dollars on lobbying efforts to keep Biden from canceling student debt, and while it's unclear how influential they might be in decision making, borrowers still have yet to see the broad relief they were promised.