The Biden administration on Monday filed a motion requesting a federal judge to dismiss SoFi’s lawsuit against the Department of Education (ED) which seeks to immediately end the ongoing freeze on federal student loan payments and interest accrual — or at minimum, to end it for borrowers who are not eligible for President Joe Biden’s student loan debt cancellation plan.
In March, SoFi, a personal finance company, filed a lawsuit against ED, arguing that the department’s latest extension of the student loan payment pause was unlawful and does not “attempt to redress harm from the pandemic at all, but rather to alleviate ‘uncertainty’ caused by the debt-cancellation litigation.”
In April, Sen. Elizabeth Warren (D-Mass.) and Rep. Ayanna Pressley (D-Mass.) pressed SoFi’s CEO Anthony Noto to answer questions about why it filed the lawsuit, calling the lawsuit “unconscionable.”
In the motion filed Monday, the Department of Justice (DOJ) argued that Education Secretary Miguel Cardona did have the authority to extend the student loan payment pause in November under the HEROES Act. DOJ also stated that SoFi’s lawsuit lacks standing because SoFi’s “goal of profiting from student-loan borrowers directly conflicts with Congress’s purpose in enacting both the HEROES Act and the Higher Education Act (HEA).”
“Congress passed both the HEROES Act and the HEA to provide aid to students that have pursued higher education—not to benefit private banks,” the motion stated. “Because SoFi’s interests are anathema to those of the statutes’ intended beneficiaries—i.e., the borrowers it wishes to force into repayment and interest accrual—SoFi lacks a cause of action to maintain this suit and it should be dismissed.”
Currently, the student loan payment pause is set to end in the coming months, pending a decision from the United States Supreme Court on Biden’s student loan debt cancellation plan. In recent months there have been other efforts by groups to end the student loan payment pause, including a Congressional Review Act (CRA) resolution — which last week was advanced by the House Committee on Education and the Workforce — that would also terminate Biden’s student loan debt cancellation plan.
Publication Date: 5/17/2023