Will Sofi Technologies be affected by the extension of the student loan payment break?
Today’s video focuses on Sofi Technologies (NASDAQ: SOFI) and how extending the student loan payment break may impact its credit segment. Here are some highlights from the video.
- Since student loan interest rates remain at zero for federal loans, this eliminates the incentives for borrowers to look to a private loan like Sofi, which can offer competitive rates during a steady interest market. In 2018 and 2019, student loan arrangements exceeded $ 6.5 billion for Sofi. In 2020, when federal student loans started suspending interest payments, they fell to $ 4.9 billion and over the past 12 months they have fallen to $ 3.8 billion.
- Investors should note that this will have no impact on Sofi’s forecast. The upcoming quarter ends at the end of December and the previous extension lasted until January 31. Analysts’ forecasts could be affected as they could have included student loan income from February 1 in part of their projections.
- Despite the slowdown in its student loans, Sofi is experiencing strong growth in its real estate and personal loans within its credit segment. Contribution profits from its lending segment reached $ 117 million, up from $ 103 million a year ago.
Click on the video below for my full thoughts and analysis.
* The stock prices used were the closed market prices of December 22, 2021. The video was posted on December 22, 2021.
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