SoFi (NASDAQ:SOFI) stock is up 5% today on exciting news for the company. Today, it announced a new “SoFi at Work” service just ahead of the end of the student loan moratorium.
This morning SoFi announced the launch of a new Student Loan Verification (SLV) program. The service takes advantage of changes featured in the Securing a Strong Retirement Act (SECURE 2.0). Specifically, it allows employers to match employees’ student loan payments to contribute toward retirement plans within an established benefits plan.
SLV functions by essentially attaching employer retirement contributions to employee student loan plans. This would allow members of the workforce to put money toward their retirement while still paying down student loans.
“At SoFi, we’re dedicated to helping people get their money right, and SECURE 2.0 and the provision that makes it easier for companies to support all employees’ financial well-being is a great example of that,” said Barrett Scruggs, vice president at SoFi at Work. “Our Student Loan Verification service makes it easy for companies to put this emerging, yet highly impactful benefit into action for a more inclusive future.”
According to SoFi, its new program seeks to benefit the growing number of adults who have claimed that student loan debt has impacted their ability to save for retirement.
SOFI Stock Climbs on New Programs
As you might imagine, SoFi, an online bank dependent on student loans as an integral aspect of its business model, has been one of the primary casualties of the pandemic-era student loan payments pause. Indeed, since the loan moratorium was put into place, SoFi has seen its share price fall steeply. It went from as high as $25 per share after going public in early 2021 to its current $8 pricepoint.
That said, the online financier has enjoyed a strong 2023 so far. SOFI is up almost 80% year-to-date. That’s largely due to the return of student debt payments on the horizon. Indeed, student loan repayment is set to kickstart back up this August, something SoFi and investors have likely been looking forward to with bated breath.
SOFI Soars Ahead of Return to Student Loan Repayment
Many analysts agree that the return to student loan payments marks a turning point for SoFi. Some stock market operators expect SoFi to reach profitability as early as Q3 of this year, rather than previous projections of Q4 profitability.
This is in no small part due to the return to student debt payments, which, before the moratorium, made up the majority of SoFi’s revenue stream. In fact, in 2019, student loans made up about 60% of SoFi’s total revenues. That figure has dropped to just 15% as of Q1 of this year.
It’s no secret that some graduates are dreading the resumption of student loan payments. However, the end of the payment pause may well send SOFI stock to new highs.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
