HomeInvesting NewsSofi Stock Increased 7.9% After President Biden Announced a Plan to Cancel...

Sofi Stock Increased 7.9% After President Biden Announced a Plan to Cancel $10,000 in Student Loans.

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SoFi Technologies (NASDAQ:SOFI)

According to earlier reports, President Joe Biden announced on Wednesday a plan to forgive $10,000 in student loan debt for borrowers with annual incomes of less than $125,000. He also extended the pause on the repayment of federally backed student loans by four months to the end of the year, bringing the total number of months the pause will last to December 31.

As a result of the plan providing more clarity on the fintech’s future prospects, SoFi Technologies (NASDAQ:SOFI) investors are bidding up the company’s stock by 7.9% in the middle of the trading day. After the lender reduced its guidance in April to reflect the comprehensive embargo on student loans, the SoFi Technologies stock declined during the month. However, this advice was based on the assumption that there would be no further pauses in activity over the remainder of the year. Before the increase today, the stock had fallen by 61% since the beginning of the year.

Borrowers are not motivated to refinance their student loans because student loan repayments have been halted since the epidemic began. Refinancing student loans has been a significant portion of the firm’s business in the past.

The company has witnessed significant growth in its personal loan business during this time. In the second quarter of 2019, SoFi Technologies (NASDAQ:SOFI) originated about $2.5 billion in personal loans, representing a year-over-year increase of 21% and a more than 100% increase compared to its 2019 quarterly norms. As the ban on student loan business continues to weigh on the business, the corporation stated, “Student loan volume of almost $399M was down to 25% of the normal pre-pandemic volume.”

Other stocks related to student loans include SLM Corp. (NASDAQ:SLM), which increased by 0.4%, Navient (NASDAQ:NAVI), which increased by 0.3%, and Nelnet (NYSE:NNI), which was trading nearly flat in the middle of the trading day.

Analysts increased their optimism toward SOFI by doubling its previous bullish rating.

Featured Image:  Megapixl @Hisdx15

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