SoFi Technologies Inc. (NASDAQ:SOFI) has seen its stock soar by approximately 45% in the past month, fueled by potential legislative changes that could significantly reroute student loan demand from federal programs to private lenders.
A proposed bill aiming to limit federal student loans for graduate students, particularly by ending the Graduate PLUS loan program, presents a multi-billion dollar opportunity for fintech companies like SoFi.
Specifically, Bank of America Securities (BofA) analyst Reginald Smith highlights President Donald Trump’s “One Big Beautiful Bill Act” (OBBBA) as a key catalyst. The proposed legislation aims to curtail federal student loans for graduate students by ending the Graduate PLUS loan program and imposing stricter borrowing limits on other graduate programs.
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Should this bill pass, it could shift up to $14 billion in student loan demand from the federal government to private lenders. Such a move could translate into considerable gains for companies like SoFi and Sallie Mae, potentially generating up to $700 million in loan origination fees and an additional $1.8 billion in annual interest income.
However, the full $14 billion may not entirely flow into private lending, as not all loans might qualify, and the bill also proposes raising federal loan limits for professional programs like law and medical school, which could temper some demand for private alternatives.
While SoFi has traditionally focused on refinancing loans for post-graduate individuals, the market for private loans taken by students still in graduate school is currently smaller, estimated at around $1 billion annually. This segment is largely dominated by Sallie Mae and Navient Corporation (NASDAQ:NAVI), which collectively account for over 80% of these loans.
Despite its smaller current footprint in this specific niche, SoFi is well-positioned to capitalize on any market shift. The company frequently appears on loan-comparison websites and university preferred-lender lists, crucial channels for attracting new in-school borrowers.
BofA analysis suggests that if SoFi were to capture an additional 10 percentage points of the privatized Graduate PLUS market starting in July 2026, it could add approximately $1.4 billion in new loan originations.
This, in turn, could translate to roughly $70 million in origination fees and $200 million in interest income, representing about a 6% boost to BofA’s 2027 revenue outlook. Furthermore, a reduction in low-cost federal graduate loans would likely empower private lenders, including SoFi, to adjust pricing and potentially increase profitability.
SoFi’s financial trajectory also appears robust independently, with CFO Chris Lapointe projecting over $3 billion in adjusted net revenue by 2025 and annual revenue growth exceeding 25% through 2026. Adding to its diversified offerings, SoFi announced in June its plans to re-enable members to buy, sell, and store popular digital currencies like Bitcoin (CRYPTO: BTC/USD) and Ethereum (CRYPTO: ETH/USD) later this year.
“We like SOFI’s positioning and go-to-market strategy and think the company will ultimately be a winner in the neo/digital bank space and could eventually become the American Express of fintech,” noted the Bank of America analyst in a Thursday investor note. BofA maintains a Neutral rating on SoFi stock with a price forecast of $16.
Price Action: SOFI stock is trading higher by 3.54% to $20.93 at last check Thursday.
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