SoFi (NASDAQ:SOFI) stock is in focus after a report was released saying Chief Justice John Roberts and other conservative justices of the Supreme Court raised questions surrounding President Joe Biden’s plans to forgive billions of dollars in federal student debt. Back in August, Biden proposed a plan to forgive $10,000 of student debt for borrowers who earn less than $125,000 a year. Recipients of the Pell Grant may also receive forgiveness of $20,000. As of late November, over 26 million loan holders had submitted an application to be eligible for the plan.
However, lower-court orders have prevented the U.S. Department of Education (DOE) from implementing the plan. As a result, student loan payments will resume 60 days after the plan is initiated or if the litigation is settled. If the plan has not been enacted and the litigation has not been settled by June 30, payments will resume 60 days after that date.
How High Can the Supreme Court Take SOFI Stock?
According to the report, Roberts led the discussion among the conservative justices, who comprise a majority of the Supreme Court. He noted that the Biden administration’s plan may have “exceeded its authority.” Per Seeking Alpha, the Supreme Court also must decide “whether the states and two individuals suing the government have the legal right, or standing, to sue.”
Biden’s plan is estimated to cost the U.S. $400 billion over 30 years. Chief Justice Roberts added, per the report:
“If you’re going to affect the obligations of that many Americans on a subject that’s of great controversy, they would think that’s something for Congress to act on.”
Despite a dent to SoFi’s student loan refinancing business, CEO Anthony Noto stated in a letter last year that he supports $10,000 in student loan forgiveness for “distressed and defaulted borrowers.” At the same time, Noto also supports resuming payments for the “affluent and capable” as soon as possible.
All in all, SOFI shareholders shouldn’t bank on the Supreme Court to provide them positive news. An investment in SOFI stock should be based on the company’s future prospects as a neobank that will be able to adequately compete with competitors by grabbing market share.
On the date of publication, Eddie Pan 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.