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Could Biden’s Student Loan Plan Boost SoFi Stock Quickly?

Today, we’re starting off with one of our favorites – fintech darling SoFi (SOFI). Throughout the course of the pandemic, the student loan moratorium has been a drag on the company’s stock. But now that freeze is finally coming to an end.

Student loan refinancing is where SoFi first cut its teeth in the finance industry. Since, it has greatly expanded its horizons, pushing into investing, crypto, checking and savings, credit cards and loan programs. And indeed, that’s why we love the stock so much for the long term.

But the majority of SoFi’s revenues still come from the company’s student loan refinancing business. And with the moratorium, that business has been put on hold. Well, that student reprieve is reaching its end. And now the Biden administration is set to decide on how to handle student loans going forward. Will it extend the pause, cancel some (or all) debt, or resume payments without cancellations? It’s a real hot topic.

The data shows that since this payment freeze’s implementation, student debtors have been spending their would-be repayments elsewhere – travel, clothing, restaurants, etc. And it all piles into the inflationary problem. Since the Biden administration is looking to do everything possible to combat this high inflation, it will likely resume student loan repayments at the end of this month.

It will do two things – have a great deflationary impact on the U.S. economy and be a massive boon for SoFi stock.

Indeed, this is a company that – even with a pause on student loan debt repayment – is still growing like wildfire. And the restarting of those payments will further accelerate this company’s huge growth narrative into 2023. Paired with disinflation and a dovish pivot from the Fed, this could really lead to an enormous breakout in SoFi stock.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.

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