US President Joe Biden's administration sued by a bank; Here's why
2 min read . Updated: 07 Mar 2023, 01:08 PM IST
Premium- The Biden administration has paused the federal student loan payments for roughly 43.5 million borrowers since March 2020
A bank in America has sued US President Joe Biden's administration and the issue is related to student loans. According to media report, SoFi Bank and SoFi Lending Corp, a student-loan refinancing company filed a complaint against the US Education Department after the President extended the student-loan payment pause.
The bank has asked the federal court to strike down the 8th extension of a moratorium on student loan repayment, calling it "an illegal overreach of power".
The Biden administration has paused the federal student loan payments for roughly 43.5 million borrowers since March 2020 at the onset of the Covid pandemic.
The US Education Department under presidents Donald Trump and Joe Biden have extended the pause multiple times.
The current pause, which costs the federal government about $5 billion per month, could last through August.
However, if Supreme Court pronounces the judgment in the bank's favour then the loan moratorium may end.
What SoFi is saying?
SoFi alleges it has lost between $9 million and $11 million in total revenues and approximately $6 million to $8 million in profits since the most recent extension went into effect in January.
SoFi projects that if the extension continues through August, it will result in $40 million to $45 million in total lost revenues and approximately $25 million to $30 million in total lost profits.
The moratorium violates the Administrative Procedure Act because the department didn’t identify any statutory authority for the extension, and failed to publish notice of the extension in the Federal Register, SoFi said.
What is the Biden administration's student loan relief plan?
Biden has attempted to cancel student loan debt and extended the moratorium via a 2003 law that lets the education secretary waive or modify student loan payments in times of a national emergency.
The US government would forgive up to $20,000 in federal loans for those who also received Pell Grants and a maximum of $10,000 for other borrowers.
Only those earning less than $125,000, or $250,000 for married couples, would qualify for the relief.