When do student loans resume? What does this mean for SOFI shares?

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fans of SoFi (NASDAQ:SOFI) stock have something to cheer about before student loan repayments return. The lender has long suffered from the federal student loan moratorium. So when do student loans resume?

Effective today, federal student loan repayments technically restart on September 1, 2022. That said, President Joe Biden’s administration recently released a series of potential loan refinancing, repayment, and forgiveness proposals. students who could help students who are not yet ready to resume payments.

On Wednesday, Biden’s education department offered $85 billion in student loan forgiveness. This includes $46 billion in outstanding loan cancellations and $39 billion in future loan cancellations over the next 10 years.

The settlement extends the grounds for loans released on the basis of the borrower’s defense through to repayment. In other words, it would allow students to have their loans canceled if their college or university “engaged in material misrepresentations or material omissions of fact, breached a loan agreement, engaged in aggressive academic recruiting, or subject of judgment based on federal or state decisions right in court or administrative tribunal”.

The proposed amendments also provide generous changes to policies related to interest capitalization, borrowers with disabilities, and borrowers who work in the public service.

The news comes as a sharp change of pace for SOFI shareholders, who have long expected the resumption of loan repayments to improve the personal finance company’s bottom line.

When do student loans resume? What does this mean for SOFI shares?

Many have argued that continued extensions of the student loan payment pause will have catastrophic effects on SoFi’s revenue. Reasonably, since the start of the moratorium, student loans have made up the vast majority of SoFi’s loan volume. The loss of his most important source of income is a brutal strike against the company.

As such, in the company’s Q1 2022 guidance, SoFi said it would likely see between $30 million and $35 million in additional revenue, or between $20 and $25 million in additional profit, if the moratorium was ending on its original deadline of February 1. The moratorium has been extended twice since then, first until May and then until its current date of September 1. Suffice it to say, SoFi’s student loan losses have only continued.

Despite the many obstacles to SoFi’s business model, the company has performed admirably. By the end of the year, SoFi is on track to triple revenue with a quintupled user base since pausing loan payments. Given the absence of the company’s most vigorous revenue producer, it has managed to maintain much of its growth trajectory.

Unfortunately, SOFI stock has had a more tenuous history, as the digital financier has fallen more than 60% this year. Investors have been hesitant about the company as the future of student loans remains unclear.

Looking ahead, the future of SoFi’s business is undeniably evolving. The company has largely abandoned its reliance on student loans. Indeed, SoFi has seen strong user and revenue growth despite the absence of its flagship product. Yet its share price has only continued to fall. If student loans really come back in September, SoFi can expect a big boost in earnings. However, as student loan legislation takes a generous turn, SoFi is still largely at the mercy of forces beyond its control.

As of the date of publication, Shrey Dua did not hold (either directly or indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.

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