SoFi Bank N.A. is attempting to halt the Biden administration's pause on federal student loan payments.
The private bank argues that the moratorium has no legal basis and has cost the bank.
In a federal lawsuit filed Friday in Washington, SoFi asked a federal judge to overturn the latest extension of the pause.
Student loan payments were first halted under President Trump's administration and the hold has been extended eight times over three years.
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"We have supported and continue to support targeted student loan forgiveness, in addition to the student loan payment moratorium during the economic crisis at the height of the COVID-19 pandemic. However, it’s time for the administration to follow through on its word to end the federal student loan payment moratorium," a company spokesperson told FOX Business Digital in a Wednesday emailed statement.
The Utah-based bank's lawsuit says the latest extension from the Biden administration – which could stretch as far as this summer – is unlawful on "multiple grounds."
In addition, it said its federal student loan refinancing business has suffered because borrowers have little incentive to refinance while payments and interest are still on hold.
While the first seven extensions were meant to aid borrowers amid the throes of the COVID-19 pandemic, the bank argues the latest extension was enacted solely in response to legal challenges to Biden's plan for widespread student debt forgiveness.
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"The eighth extension does not even attempt to redress harm from the pandemic at all, but rather to alleviate ‘uncertainty’ caused by the debt-cancellation litigation," the lawsuit said, arguing that this isn't a valid reason authorized by the HEROES Act and that the extension had violated the Administrative Procedure Act.
"This latest extension is an illegal overreach of power in violation of the Administrative Procedure Act and, as this falls under the Major Questions Doctrine, Congress did not authorize this extension of the payment pause," the spokesperson said. "At the cost of $5B per month, Americans shouldn’t have to carry this burden. It’s time the administration upholds its word to end the moratorium, or at a minimum, puts those not eligible for forgiveness back into repayment."
SoFi said the most recent extension has cost the bank at least $6 million thus far, with a potential total of $30 million in losses if it continues through August.
The Department of Education has defended the legality of the pause.
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It called the lawsuit an "attempt by a multi-billion dollar company to make money while they force 45 million borrowers back into repayment."
"The department will continue to fight to deliver relief to borrowers, provide a smooth path to repayment and protect borrowers from industry and special interests," the agency said.
The Associated Press contributed to this report.
