Good news ahead for at least some student loan borrowers, as the Biden Administration is poised to forgive more student loans. Student loan stocks, meanwhile, were mostly down in the wake of the announced plans, with a large chunk of their assets suddenly rendered moot. Navient (NASDAQ:NAVI) is down fractionally, and SoFi Technologies (NASDAQ:SOFI) is down just over 2%. Oddly, SLM (NASDAQ:SLM) is up modestly in Friday’s trading.
The latest round of debt forgiveness comes in at $5 billion for around 74,000 borrowers. For those wondering how such a thing could be after the Supreme Court blocked this sort of thing in the past, here’s how it works: around 44,000 of the borrowers in question went into teaching, nursing, or firefighting, and that qualifies them for student loan forgiveness after 10 years in public service. Meanwhile, much of the rest—about 30,000—have been repaying debt for the last 20 years but haven’t gotten the debt relief earned from income-based plans.
End Run or Careful Planning?
Those who remember last June, when the Supreme Court first took the Biden Administration to task over its plans to declare debt meaningless, are likely wondering what happened. A CNN report from October helps fill in some of the gaps. Those public-sector workers and those who have been paying for a long time were eligible for forgiveness under existing laws that passed Supreme Court muster in the past. The rejected plans, meanwhile, called for larger-scale forgiveness plans than the laws permitted. While that got shut down, the previously-allowed terms and conditions were still quite in play.
Which Student Loan Stock is a Good Buy Right Now?
Turning to Wall Street, SOFI stock may have been hit hard today, but it’s the leader among this group. Though it’s only rated a Hold, it’s got a 19.97% upside potential on its average price target of $8.71 per share. Meanwhile, NAVI stock is the laggard, as this Moderate Sell-rated stock with an average price target of $17.11 per share can only muster a 2.03% upside potential.
