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The CEO of a major student-loan lender says he doesn’t support broad debt relief and that borrowers ‘that are capable of paying need to be put back into payment’

President Joe BidenUS President Joe Biden.

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  • SoFi CEO Anthony Noto told Yahoo Finance he doesn’t support broad plans to cancel student debt.
  • He said borrowers who can afford to pay back their loans should resume repayment.
  • The student-loan payment pause is set to end 60 days after June 30, or 60 days after the lawsuits blocking the relief are resolved.

The leader of a major student-loan lender thinks it’s time borrowers get back to paying off their debt.

After releasing SoFi’s fourth quarter earnings results this week, CEO Anthony Noto joined Yahoo Finance to discuss the results, along with his outlook for the student-loan industry. He’s not a fan of broad proposals like President Joe Biden’s plan to cancel up to $20,000 in student debt for federal borrowers making less than $125,000.

“The programs that we don’t support are widespread programs that give to the rich or give to the wealthy or give to the people that are fully capable of paying back their student loans,” Noto told Yahoo Finance.

At the moment, Biden’s plan remains blocked due to two conservative-backed lawsuits, and millions of borrowers are entering a year of uncertainty with the Supreme Court set to hear arguments to the cases at the end of February. In the meantime, student-loan payments are on pause through 60 days after June 3o or 60 days after the litigation is resolved — but Noto thinks that’s too generous a policy and will “subsidize people that don’t need it.”

“We should absolutely fund those people that need the help,” he said. “We should forgive those people that need the help. But those… that are capable of paying need to be put back into payment, and they shouldn’t have their loans forgiven either.”

Biden also recently put another proposal on the table to reform income-driven repayment plans, including cutting undergraduate borrowers’ monthly payments in half and limiting interest from adding onto the principal balances. Noto said plans like that one are “really critical to helping people that have taken on too much student loan debt or, in some cases, were misled and they don’t have the ability to pay it back.”

Noto had previously expressed his belief that the student-loan payment pause should not continue for all borrowers. In March 2022, a few months before Biden extended the payment pause for his fourth time, Noto wrote in a blog post that Biden should fulfill his campaign pledge to cancel $10,000 in student debt, target the pause on payments only for those in “severe hardship,” and put the “affluent and capable” borrowers back into repayment.

“If the government needlessly extends the broad moratorium for a fourth time, not only will it add to the country’s inflation woes and unnecessarily give to the wealthy who are willing and able to repay their debts, but it will severely disrupt people’s ability to make long-term financial plans,” he wrote

While Biden’s administration has remained confident that its plan to cancel student debt is legal and will prevail in court, the White House said it is not considering any Plan B at the moment should the Supreme Court strike the relief down. An administration official told reporters on a press call last week that the 60 day period after the payment pause ends “should give us enough time after the Supreme Court rules to transition to the next phase of all of this.”

Still, some borrowers are concerned with the looming repayment. One borrower with $230,000 in student debt previously told Insider that he’s worried “the White House is so desperate to restart payments and get back to normal that they’ve forgotten that ‘normal’ is a decades-long debt sentence; either way, it will be an excuse to say they’d done all the can.”

Read the original article on Business Insider