After roughly three years with the student loan moratorium in place, it looks like the one-stop shop financial services company SoFi (SOFI 0.47%) has finally run out of patience with the Biden administration.

Recently, SoFi sued the administration and requested that a federal court reverse the Biden administration's decision to extend the moratorium for an eighth time. Since the moratorium was first adopted, it has cost the company potentially hundreds of millions in profits, SoFi says. Here's why.

Stuck in limbo

The moratorium was first instituted in early 2020 during the Trump administration in response to the pandemic, with the goal of alleviating financial hardship as much as possible during the unprecedented economic shutdown. But even as consumer savings swelled during the pandemic, the moratorium remained in place.

Person looking at multiple computer monitors.

Image source: Getty Images.

It was scheduled to expire at the beginning of this year but then lawmakers challenged President Biden's plan to forgive as much as $20,000 in student loan debt to certain borrowers. The Supreme Court is expected to soon rule on the matter and the Biden administration extended the moratorium until the Supreme Court makes a ruling.

Student loan refinancing used to be SoFi's largest lending business but since the moratorium, originations have plummeted. Higher interest rates have only made refinancing even less attractive. When the moratorium is in place, student loan borrowers has less incentive to refinance because they are not making payments on their current loans. Furthermore, speculation about student loan forgiveness left borrowers in limbo. Why would you refinance if you could get $10,000 or $20,000 wiped away? 

SoFi has, unfortunately for the company, had the worst of both worlds. The moratorium has been around way longer than anticipated and the student loan forgiveness debate has been dragged out. If you're a SoFi shareholder, all you want is clarity at this point so people can move forward with refinancing.

SoFi in its lawsuit claims the latest extension of the moratorium has cost the company $6 million in profits and could lead to $30 million in lost profits if it continues until August, which is when it is currently expected to expire. Since the moratorium was first enacted, SoFi claims it has cost the company $150 million to $200 million in potential profits.

"The eighth extension does not even attempt to redress harm from the pandemic at all, but rather to alleviate 'uncertainty' caused by the debt-cancellation litigation," SoFi said in its lawsuit, adding that the moratorium at this point should only apply to people who would be eligible for forgiveness.

Why is SoFi doing this?

I don't think the company is doing itself any favors from a public relations perspective with this lawsuit. Regulators are already looking into the company's crypto operations and student loans are a hot-button issue. With a Supreme Court ruling expected in June, I'm not really sure what this lawsuit can accomplish from a legal perspective before then.

While I can only speculate here, one reason SoFi might be doing this is to try to push the agenda or prepare for a Supreme Court ruling (expected in June) that strikes down Biden's forgiveness plan.

At that point, Biden may move to extend the moratorium again. SoFi's stock has been hammered and the market is really looking for growth companies that are profitable, which SoFi doesn't expect to achieve until the end of this year. Another extension of the moratorium may throw a wrench in that plan.