A portion of student loan debt for millions of Americans is expected to be forgiven via executive action from President Joe Biden Wednesday. A U.S. senator is speaking out in support of Biden’s announcement and taking on a public company that is a large player in the student loan industry.
What Happened: Biden is expected to announce the cancelling of some federal student loan debt, a move that has been rumored for months.
The decision could split the country, with many Americans already paying a portion or all of their student loan debt.
Potential political and legal challenges to Biden’s announcement could follow, according to the Wall Street Journal.
Biden’s announcement could also see an extension of a pause on student loan payments through the end of the year, extending the relief that is set to expire on Aug. 31, 2022.
Several companies are big players in the student loan payments space including SoFi Technologies SOFI. The company has now found itself the target of U.S. Sen. Bernie Sanders, a Vermont independent.
“If SoFi, a student loan refinancing company, could give its CEO a 92% raise last year paying him a grand total of $103 million in compensation and spend $625 million to put its name on the LA Rams football stadium, you know what President Biden can do? Cancel all student debt,” Sanders tweeted.
Why It’s Important: Sanders has been a proponent for eliminating student debt for many years and his comments are no surprise.
Sanders has been a U.S. senator since 2007 and spent decades of his life in politics, including running for president of the United States as the Democrat nominee in 2016 and 2020 and finishing in second place before conceding to Hillary Clinton and Biden, respectively.
The student loan business makes up a portion of SoFi’s lending products, which also include home loans and personal loans. The impact of the student loan forgiveness by Biden could impact the company’s revenue and earnings for many years to come.
SoFi reported record revenue in the second quarter and raised full-year guidance. The company will be one of many to be analyzed over the impact of Biden’s announcement and the financial impact it could have.
The comments from Sanders could put pressure on the company for expense control, with filings showing CEO Anthony Noto was rewarded in 2021 with a raise in compensation.
Noto was paid a base salary of $850,000 in 2021, an increase of 41.7% from his 2020 salary. The CEO also received $892,500 as a bonus in 2021 and stock awards worth $101.2 million, bringing his total 2021 compensation to $103 million versus $53.5 million in 2020.
“You won’t hear about it in corporate media, but this is what a rigged economy is all about. Three people now own more wealth than the bottom half of American society. 45% of all new income is going to the top 1%. CEOs are paid 350x more than their average worker. Absurd,” Sanders tweeted.
SOFI Price Action: SoFi shares are up 7.13% to $6.61 on Wednesday versus a 52-week range of $4.82 to $16.47.
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