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Why SoFi Is Suing to End the Student Loan Payment Pause



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The online personal finance company called SoFi first made a name for itself by rounding up money from Stanford alumni to help the university’s M.B.A. students get cheaper student loans. Later, it held mixers for single borrowers with fancy degrees. Social Finance, get it?But last month, the now public company, with over $1 billion in revenue from private student loans and other offerings, did something shocking: It sued the Department of Education to end the agency’s pause on federal student loan payments and force tens of millions of debtors who are not SoFi’s customers — teachers, soldiers, sick people who had to drop out — to repay their debts faster.Why would a bright, shiny company not far removed from its 2011 start-up days act in a way that seems so downright mean?The answer lies in the highly imperfect way we help most people — not just future M.B.A.s — pay for higher education in America. But it’s also an object lesson in the red-blooded capitalistic behavior we should expect from any profit-seeking entity, no matter how it dresses itself up.SoFi exists because of a quirk in the federal student loan program. While the government charges different interest rates depending on the loan type, within those loan types there is no differentiation. Graduate students all pay the same thing, no matte …

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