Fintech company SoFi—short for Social Finance—started as a way to help students find more affordable options to finance their debt. Now, the student loan refinance company is suing the government to end the COVID-era pause on student-loan payments, interest and collections, Marketwatch reported, and some of its customers are not happy about it.

Founded in 2011 at Stanford University’s Graduate School of Business to help students tap the alumni network to help them finance their education, the company has attracted borrowers such as 34-year-old Mick Santos. After paying off his $45,000 in student loans, he opened up savings and investing accounts with the company. The news of the lawsuit has made him consider moving his money elsewhere, he told Marketwatch.

“What really drew me to them in the first place was that this was started by students for other students to tackle student-loan debt,” he said. “This move by them is very off-key, and to me it just seems like they’re just worried about profits, which is super disappointing.”

Another customer, Michael Morse, is also unhappy with the SoFI suit. Morse initially opened checking and savings accounts with the company because of its relatively high interest rate. While he has no loans refinanced by SoFi, he does have about $300,000 in student loans from college and medical school. (He is sticking with the protections and benefits offered by the federal government, including the opportunity to have them forgiven after 20 years.) When he heard about the SoFi suit, he started looking to move his account elsewhere.“ The culture of a company is important too and what they stand for,” Morse said.  “When it’s as simple as pulling your money out and putting it somewhere else, you’ve got to vote with your dollars.” 

SoFi markets its loan refinancing to people who are high earners, not yet rich, known as HENRYs. Because these borrowers are usually a good credit risk, it lends at a lower rate than the federal government.  But now that the government is providing a 0 percent interest rate to these HENRYs, SoFi estimates it has lost between $300 million and $400 million in revenue and between $150 million and $200 million in profits, according to its legal filings. “The Moratorium has eliminated the primary benefits of student loan refinancing,” the company wrote in the suit. 

In a congressional lobbying effort, SoFi  and other student loan refinance companies proposed language that said that the pause wastes “taxpayer funds by providing payment relief to all borrowers, including wealthy, high-earning borrowers, instead of using those funds for the neediest borrowers,” according to Politico.

SoFI alleges that the latest extension pause, last November, “is unlawful on multiple grounds.” It argues that the Biden Administration overreached its executive authority when it enacted that pause extension. That is similar to arguments raised by challengers to the administration's debt relief plan at the Supreme Court last month. 

SoFI's suit contrasts with the company’s image, said Jonathan Bundy, an associate professor of management at Arizona State University’s W. P. Carey School of Business.

“They’ve built a brand on being something different, they’ve been pretty aggressive on targeting millennial and Gen Z customers and trying to be the face of this fintech change of how we bank and keep our money,” he told Marketwatch. “To me it seems pretty inconsistent to file a lawsuit that goes against student-loan borrowers.”   

While Dan Dolev, a senior Wall Street analyst at Mizuho, called SoFi’s decision to fight back against competition from the government as “a net positive,” the suit puts the company “on the wrong side of this issue in terms of the way they’re approaching it,” Paul Argenti, professor of corporate communication at the Tuck School of Business at Dartmouth, told Marketwatch.

It could hurt the company’s reputation, said Bundy. “A company earns a reputation through consistency of action,” he said. “A lawsuit like this, especially if it gets some press play and some internet buzz, seems inconsistent.

To win the suit, SoFi must establish standing, given that it is not a direct student loan servicer, but rather a refinancer. That could be an obstacle, Tara Grove, a professor at the University of Texas School of Law, told Marketwatch.

“Even if the Department of Education restarted federal student loans it’s not at all clear that any of those borrowers would refinance with SoFi,” she said. “Any one of those borrowers could choose either not to refinance at all or to refinance with someone else. My basic conclusion is that this is a tough standing argument because so much of what they’re saying is speculative.”

No other student loan companies have sued over the administration’s COVID student loan relief policies.

Even if SoFi wins the suit, “I think that would be reputationally speaking very bad” for the company, said Bundy.