SoFi Technologies (NASDAQ:SOFI) has had a complicated month, and it isn’t likely to clear up soon. Despite being one of the trendiest names in personal finance, it has lost more than 60% of its value since 2022 began. One of the headwinds that has pushed SOFI stock down has been the federal government’s wavering on student loan forgiveness. While President Joe Biden claims to be close to a decision, he has offered few details. However, he expects to make an announcement on the subject by June 24.
SOFI stock has been turbulent today but remains in the green. Shares plunged last week amid the tech stock selloff, but company insiders have continued buying SOFI stock despite its continuous downward trajectory. But now the Biden administration’s verdict on student loan debt cancellation is hanging over SoFi. This means plenty of uncertainty for investors.
What Comes Next for SOFI Stock
Since the Covid-19 pandemic began in 2020, the federal government has implemented multiple student loan payment moratoriums. While these policies have been helpful to many Americans struggling with debt, they haven’t been good for SoFi, which offers borrowers loan refinancing options. The trend of recent graduates delaying their loan payments has meant less work for companies in SoFi’s space.
The current repayment pause expires on Aug. 31. But Biden isn’t likely to pass down a decision until that date draws near. GoBankingRates reports at a recent press conference, “Biden said he and his team are close to a decision on whether to forgive student debt, though he didn’t provide any further details.” That suggests he doesn’t have any progress to report.
The Biden administration is set to pass down a verdict this week on the proposed federal gas tax pause. With gas prices and consumer staple costs soaring, many Americans are facing a worrisome economic landscape. Politicians understand action is necessary to combat the inflationary trends. But the recent Federal Reserve rate hike has only served to disrupt financial markets so far. Reducing debt is a delicate operation.
While a gas tax pause won’t mean much for SOFI stock, once it is passed, attention will turn to the question of student loan debt forgiveness. While Biden has maintained his support for at least partial forgiveness, many conservative politicians and lawmakers strongly oppose it. It has proven a difficult area for the Biden administration. For this reason, the President will likely take his time in handing down a verdict. That said, he will have to reach it before the current pause expires in August.
What It Means
SoFi has faced enough headwinds this year without the student debt forgiveness uncertainty. Now that summer is here, investors should be watching closely for the next decision regarding federal student loan payments. Biden is planning to hand down a decision on other areas of debt this week. For this reason, SoFi investors will be closely watching for student debt updates.
This may generate some short-term momentum. But the fact that Biden is likely delaying the verdict’s announcement is ultimately bad news for SOFI stock. It means the current uncertainty will continue through July and most of August, making it hard for shares to rally. Investors shouldn’t expect to see a turnaround for SOFI stock unless it sees an unexpected catalyst.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.