SoFi (NASDAQ:SOFI) stock is becoming increasingly in focus for many growth investors. A relic of the special purpose acquisition company (SPAC) era, SOFI stock has been on a wild ride over the past couple years.
This is mainly because the company’s core business model revolves around student loan lending/refinancing. When former President Donald Trump and his administration first put a pause on student loan payments in early 2020 — roughly three years ago — the question became “When will student loan repayments restart?” Borrowers were unlikely to choose to refinance their student loan while the pause was in place.
For SoFi, this has been the elephant in the room — and largely why SOFI stock is down so significantly from its peak.
However, President Joe Biden’s plans to forgive up to $20,000 of student debt is the latest factor to further prohibit investors from refinancing their student loans. Under Biden’s plan, only government loans will be applicable for this forgiveness. Refinanced loans are excluded from the plan.
Accordingly, today’s news that Senate Republicans are looking to overturn Biden’s student loan forgiveness plan has sent shares of SOFI stock higher. Let’s dive into what’s being proposed — and what this means for the fintech company.
SOFI Stock Moves Higher on Bid to Overturn Biden’s Student Loan Forgiveness Plan
A Congressional Review Act (CRA) resolution has been put forward by three GOP Senators. Bill Cassidy, John Cornyn and Joni Ernst are sponsoring the resolution, which would allow the Senate to overturn Biden’s student loan forgiveness program with a simple majority.
If the Republicans are successful in overturning Biden’s student loan forgiveness plan, payments will officially resume. In turn, student loan borrowers will have a greater incentive to refinance their loans.
Of course, interest rates remain higher than we’ve seen in some time. So, the demand for loan refinancing across the board has seen a drop-off.
That said, this news is undoubtedly positive for SoFi moving forward. Currently, SOFI stock is on my watch list, although I’m not considering it at the moment. Still, I have a generally bullish perception of its long-term future prospects.
On the date of publication, Chris MacDonald 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.