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WASHINGTON —A private bank is trying to force the Biden administration to end its pause on federal student loan payments, arguing the moratorium has no legal basis and has cost the bank, known for its refinancing business, millions of dollars in profits.
In a federal lawsuit filed Friday in Washington, SoFi Bank N.A. asked a federal judge to overturn President Joe Biden’s latest extension of the payment pause. Student loan payments first were halted at the start of the pandemic by President Donald Trump’s administration. The pause has been extended eight times over three years.
The bank says its federal student loan refinancing business has suffered because borrowers have little incentive to refinance while payments and interest remain on hold. At a minimum, the lawsuit asks a judge to limit the pause only to borrowers who would be eligible for Biden’s cancellation plan.
Biden’s latest extension, which was announced in November and could stretch as far as this summer, is unlawful on “multiple grounds,” the lawsuit claims.
