Biden’s student loan payment suspension is challenged in court by SoFi Bank.

SoFi Bank N.A. has filed a federal lawsuit in Washington, D.C. asking a judge to overturn President Joe Biden’s latest extension of the payment pause on federal student loans. SoFi argues that the moratorium has no legal basis and has cost the bank millions of dollars in profits. The bank claims its federal student loan refinancing business has suffered because borrowers have little incentive to refinance while payments and interest remain on hold. The lawsuit asks a judge to limit the pause only to borrowers who would be eligible for Biden’s cancellation plan.

The latest extension, which was announced in November and could stretch as far as this summer, is unlawful on “multiple grounds,” according to the lawsuit. SoFi argues that this extension was enacted solely in response to legal challenges to Biden’s plan for widespread student debt forgiveness, which is currently being challenged in the Supreme Court. The bank also argues that the extension violated the Administrative Procedure Act because the administration failed to invite feedback from the public.

SoFi says the most recent extension has cost the bank at least $6 million in lost profits and could lead to a total of $30 million in losses if it continues through August. The Education Department defended the legality of the pause, calling the lawsuit “an attempt by a multi-billion dollar company to make money while they force 45 million borrowers back into repayment.”

Borrower advocates have condemned the lawsuit, calling it a money grab at the expense of those struggling with student debt. “The real story here is the huge risk this poses to tens of millions of working people who SoFi would never lend to — families across the country that depend on the student loan payment pause to shield them from financial devastation,” said Mike Pierce, executive director of the Student Borrower Protection Center.

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