Shares of SoFi Technologies Inc. (NASDAQ:SOFI) jumped on Tuesday amid reports that the President Donald Trump administration may sell parts of the federal government's $1.6 trillion student loan portfolio to private lenders, fueling optimism for the fintech's growth.
Trump Administration Weighs Selling Federal Student Loans To Private Lenders
Senior officials at the Treasury Department and the Department of Education have discussed transferring "high-performing" student loans to the private sector, according to Politico
The report, which has not been independently verified, sent SoFi's stock up more than 3% to $27.18, even as the broader S&P 500 slipped.
SoFi CEO Sees Opportunity If Washington Steps Back From Lending
SoFi, which offers student loan refinancing, investing, and banking services, could benefit if the federal government reduces its role in lending, reported Barron.
"If the government backs away from providing in-school loans, GRAD Plus, et cetera, et cetera, we'll absolutely capture that opportunity," CEO Anthony Noto said during an April earnings call.
"We would love to do as much as we can in that market," he added.
The Trump administration has pushed to restructure the Department of Education, at times suggesting it could shift oversight of student loans to the Small Business Administration.
Although a judge temporarily blocked the plan in May, the Supreme Court cleared the way in July for further restructuring.
Federal Student Loan Caps Could Boost Private Lenders Like SoFi
In July, President Trump signed legislation and the tax and spending bill that imposed new limits on federal student loans.
Parent PLUS loans were capped at $65,000 per student, graduate students at $100,000, and professional students at $200,000, with annual limits set to take effect July 1, 2026.
These restrictions are expected to leave many students unable to cover their full education costs with federal loans, likely pushing more borrowers toward private lenders such as SoFi.
"Given borrowing limits, many students…may be unable to finance their education costs with just federal loans, forcing many to private lenders," Tim Switzer of Keefe, Bruyette & Woods.
Noto said the company would "absolutely capture that opportunity" if federal loan restrictions were implemented, highlighting potential growth for the fintech in the changing student lending landscape.
Price Action: SoFi Technologies shares rose 6.75% on Tuesday to $28.14 and gained an additional 1.21% in Wednesday pre-market trading, according to Benzinga Pro.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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