The stock market was nearly flat Wednesday morning, with all three of the major averages nearly unchanged as of 9:45 a.m. ET. However, banking disruptor SoFi Technologies (SOFI 0.12%) was a major outperformer, with shares rising by as much as 9%.
The short answer is that the stock is higher in anticipation of President Joe Biden's student loan forgiveness announcement, which is expected to come as soon as today. While there are no official details, the president is expected to announce $10,000 in loan forgiveness for borrowers who earn $125,000 or less. Along with the forgiveness plan, Biden is widely expected to extend the repayment pause that has been in effect for more than two years.
For SoFi, this is significant because a large part of its business is student loan refinancing. In fact, that was the company's original focus, and until the pandemic, was a major growth driver. As of the end of the second quarter, SoFi had $3.25 billion in outstanding student loan balances, making up 40% of the bank's total loan portfolio.
There are still a lot of unknowns. It's not clear whether there are any other student loan policy changes that will accompany the forgiveness plan, nor do is it clear at this point if and until when the payment pause will be extended.
However, any light at the end of the tunnel would certainly be a positive catalyst for SoFi. In the current environment, the company's once cash-machine student loan refinancing business has ground to a halt. With a final decision on student loan forgiveness, the company could see a surge in borrowers who want to refinance their remaining balances.