SoFi (NASDAQ:SOFI), which provides many student loans, is trending on social media today. SOFI stock is in focus today after the non-partisan Congressional Budget Office (CBO) estimated that President Joe Biden’s student-loan forgiveness plan would cost American taxpayers $400 billion over three decades.
Under Biden’s blueprint, Washington would reduce the amount owed by some recipients of student loans by $10,000-$20,000. Over 40 million citizens could be impacted by the initiative, the White House has stated.
The Potential Impact on SOFI Stock
The loan-forgiveness plan may negatively impact SoFi’s results, as the amount of the payments that the company will receive on the impacted loans will decline, while the value of the loans that are newly refinanced by borrowers will also decline.
On the other hand, however, the Biden administration announced in tandem with the loan forgiveness plan that the moratorium on payments on student loans would end as of January 2023.
In other words, shortly after the upcoming New Year, Americans with outstanding student loans will have to resume making payments on their loans, and some of these recipients will seek to refinance their loans with SoFi. As a result, the company’s revenue from student loans will jump starting in January.
An Analyst’s Take
On Sept. 14, Bank of America raised its rating on SOFI stock to “buy” from “neutral.” The firm expects SoFi’s financial results to be meaningfully boosted by the termination of the moratorium, which was first imposed at the beginning of the Covid-19 pandemic.
Bank of America also predicts that SoFi will get a lift from its “high-profile NFL-aligned marketing investments.”
SOFI stock has dropped 11% in the last month, and it has tumbled 67% this year. However, the stock is up almost 3% today.
On the date of publication, Larry Ramer did not have (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.