Last month, SoFi Bank filed a federal lawsuit in an attempt to overturn President Joe Biden’s extension of the student loan payment pause, arguing that its business has suffered as a result of the moratorium. The following is a letter from the leadership team at the Student Debt Crisis Center, a nonprofit organization fighting for the rights of borrowers and an end to the student debt crisis.
Dear SoFi and CEO Anthony Noto,
We are writing today to express our grave concerns about the ongoing student debt crisis in the United States, and in particular, your recent decision to sue the Biden administration over its pause on federal student loan payments. We urge you to drop this lawsuit and instead work towards finding solutions that will help alleviate the burden of student loan debt for all borrowers.
As the leadership team of Student Debt Crisis Center, we speak with thousands of borrowers, students, and parents who are unable to put food on the table, keep a roof over their heads, and fully support their family due to this debt. Your lawsuit is an assault on their financial and personal wellness.
According to the Federal Reserve, outstanding student loan debt in the United States reached a record high of $1.6 trillion, affecting more than 44 million borrowers. This is a staggering number that is placing a significant burden on millions of Americans, preventing them from achieving their financial goals and hindering economic growth.
SoFi’s lawsuit will harm hardworking families and contribute to persistent racial inequities in education and the economy. The average student loan debt per borrower in the United States is $37,574 according to the US Department of Education. That burden disproportionately affects low-income and minority borrowers. Black students are more likely to borrow federal loans, and are more likely to default on their loans than their white counterparts.
Student loan debt is preventing borrowers from achieving important financial goals, such as buying a home or starting a family. According to a survey by the National Association of Realtors, 83 percent of non-homeowners cited student loan debt as a barrier to homeownership. Rising levels of student loan debt have led to a lower level of entrepreneurship and reduced consumer spending.
We invited current SoFi customers who have been affected by student loan debt to share their stories with you to better illustrate the consequences of your actions. We hope that their experiences can help shed light on the real impact of these loans on people’s lives.
This news makes me very angry. I refinanced my student debt with SoFi during a very stress-filled time in life. I was a surgery registered nurse but needed to have my own major surgeries and was panicking about my government loans interest rates. So, I decided to redo with SoFi to lock in a rate. In hindsight, I have regretted this many times, especially now. I can no longer work as a surgery nurse, struggle to make payments, but never miss one and now they are making a bad situation worse by filing the suit.
My son refinanced his loans to SoFi in June 2023 and they told him he didn’t need to make payments for six months and no interest would accrue. When he got his first payment the loan had increased by almost $3,000. He called them and told them about what they said and they said either he could pay that or it would attach to the loan and keep accruing interest.… He’s made three payments and it’s only gone down $2,000. He pays $2,200 a month.
Sofi’s lawsuit is a typical example of corporate greed. I have a personal loan, credit card and stock investment with SoFi. They have been bombarding my email with offers for refinancing my student loan. I guess they have filed a lawsuit to end the pause so they continue to intimidate customers, like me, to consider their harassing offers. I have communicated my feelings and disgust through their customer service. Of course, no response.
I once tried to apply for a SoFi loan in a time of desperation when I thought, well, maybe if I just refinance it will help me.… I am glad that I didn’t do that, realizing that having my loan with the federal government at least helped me to qualify for Public Service Loan Forgiveness.… What is irritating to me is that SoFi continues to contact me at least several times per week, trying to get me to refinance my student loans. They advertise as if it is going to help me and that I will pay less in the long run.… They are manipulating people into transferring their loans to them so that they make money off the individual and then the individual wouldn’t qualify for any other assistance thus sucking them back into a never-ending debt.… It isn’t right to do this to hard-working people who are usually struggling as it is and just desperate to find some solution that helps them financially. But to now have SoFi try to block something that would help everyone is just wrong, they are out to make millions of more dollars for themselves and not looking out for the greater good of the people and economy.
Your decision to sue the Biden administration over this pause demonstrates a complete lack of empathy for those who are struggling, like the borrowers who shared their stories above. The American public also believes that SoFi’s lawsuit is egregious. Over 33,000 people have signed a petition urging SoFi and other student loan companies to drop legal attacks against borrower relief programs saying they were “outraged” by the company’s actions.
A letter to SoFi written by Senator Elizabeth Warren and Representative Ayanna Pressley put it simply: “SoFi’s attempt to end the student loan payment pause and force millions of Americans into repayment while raking in massive revenues and handing out huge executive paychecks represents corporate greed at its worst.”
The letter points out that Mr. Noto was paid nearly $103 million in 2021, and SoFi’s four other highest-paid executives made over $70 million combined. We believe that SoFi—and Mr. Noto, specifically—do not understand the real impact of student loan debt and the urgency of this issue.
In conclusion, we urge SoFi and Mr. Noto to drop the lawsuit against the Biden administration and instead work towards finding solutions that will help alleviate the burden of student loan debt for all borrowers. The ongoing student debt crisis is a serious issue that requires the attention and cooperation of all stakeholders. We must work together to find solutions that will allow borrowers to achieve their financial goals and contribute to economic growth.
Natalia Abrams, Cody Hounanian, and Sabrina Calazans of the Student Debt Crisis Center (SDCC)