Elizabeth Warren has a point. On March 7, 2023 she tweeted the following:
“SoFi’s CEO received $103 MILLION in compensation and now he’s trying to force millions of student loan borrowers recovering from the pandemic back into repayment. Why? So SoFi can keep boosting its profits. This is greed, plain and simple.”
This comes as SoFi sues the Biden administration for its pause on student loans in an attempt to force borrowers to begin paying again.
The administration originally paused student loan payments as the Covid Pandemic raged on and ravaged the economy. The pauses have since continued due to the dire economic state of many Americans. However, the financial stability of the majority of Americans has gotten worse since then.
As inflation has increased 9% YoY, wages have hardly increases while Layoffs and shortages have squeezed consumers. Credit card debt is at an all time high, savings are at an all time low, and the threat of student loan payments beginning would tip many consumers over the edge into financial ruin. And remember, with student loans, you can not declare bankruptcy.
To dig into the data:
Credit card debt at the end of 2022 reached $930.6 billion.
50% of Consumers do not have $1000 saved for emergency expenses.
The Savings rate of Americans has reached a 17 year low.
$1.75 Trillion total amount of student loan debt in America
SoFi’s Business Model
The company’s revenue largely depends on student loans to exist and to continue increasing. They then refinance the loans into lower interest rates and service the loans over decades to make a profit. If student loans were to be relieved, then their entire business would crumble. The student loan debt pause itself poses an existential threat to the business, and as such they have filed a lawsuit against the Biden Administration.
Is it greed?
You tell us in the comments below.