These tailwinds will drive the student loan refinancing market

The student loan bell is about to ring. We are less than six days away from the education department lifting its paws on mandatory student loan repayments for borrowers who had defaulted on their loans. So to put that into perspective, roughly 5.3 million borrowers are in default on federal student loans and those borrowers will have to start making their payments again. But How might that affect publicly traded lenders? Since the announcement on April 21st, Nelnet is roughly up about 3 percent. Sallie Mae has risen 7.8 percent, but SoFi has been the big winner. Look at this gain of nearly 23 percent. The fintech company not only stands to benefit from borrowers looking to refinance their loans, it's coming off a boffo earnings win today, fueled by a record number of new customers. Joining us now, SoFi CEO Anthony Noto. Anthony, before we get to the very impressive earnings, I do want to tackle the student loan debt collection restart, which begins May 5th. What are you expecting as far as numbers of customers looking to refi their federal loans? Well, I think there could be two tailwinds that would help drive our student loan refinancing market. One is just the interest rate environment. There's a number of interest rate cuts expected throughout the year that would definitely make it more attractive for those people that have federal student loans to refinance at a lower rate. And then those people that are in default, it really will come down to their creditworthiness. You know, have they been able to maintain the same creditworthiness they had prior to the moratorium and prior to not paying back their loans? It could be a second tailwind for sure, but it really will have to wait and see what happens in five days, as you mentioned. Well, you saw a huge number of new customers. Perhaps some of them are jumping on board because they're looking ahead to that. But as I look at your home loan business, which grew your originations up 54 percent year over year, total loan origination reached a record of what, $7.2 billion. Student loans are about $1.2 billion of that. But I mean, when you look at this loan business of yours, it continues to just show extreme muscle. Yeah, the business is really hitting on all cylinders. We have 33 percent year over year revenue growth to $771 million. As you mentioned, we had really strong lending growth up 30 percent. Our financial services business, though, was up 66 percent on the back of our SoFi money account with the attractive interest rate that we provide on checking and savings. And then our loan platform business, which is our leverage of our underwriting capabilities, our marketing capabilities and our servicing capabilities, where we're underwriting loans on behalf of other people and they're taking them off our books a couple of days later. So it doesn't really require capital and we don't retain credit risk. So that business is also booming. And then last, the invest business was up 21 percent in product growth. And the largest level of engagement that we've had from our members in invest really compared to any time period, even when we launched crypto or relaunched IPOs. Depending on the minute that we're looking at interest rates, they're either spiking, which we saw earlier in the beginning of this month, or they have come way down when we're talking about the 10 year yield. So as you look at that, did you see that kind of fluctuation with your customers who were looking to do loans? On the interest rate side, I would say the area that's most sensitive to the daily fluctuations is the home loan refinancing market. We believe that as rates come down, that market's going to pick up quite dramatically, both on the refinancing side, but as well as the purchasing side, as the higher rates on mortgages of over seven percent for most of the last year has made it prohibitive for people buying homes. So as rates come down, the mortgage business should pick up quite meaningfully, both on the refinancing side and on the purchase side. This quarter, we benefited from a strong home equity loan market. It was a record for us in that area and a business we didn't even have a year ago. You're just making money out of thin air, which leads me to the investment business. One of the new offerings, well, it's sort of an old new one, is crypto. You're coming back to being able to offer crypto, which you had to stop when you got your bank charter. But it appears, obviously, that the rules are changing very quickly under a very crypto friendly administration. Tell me what you offer and how you're different from, say, a Robinhood or any of the other opportunities out there for people to dip their toe into any cryptocurrency. Sure. First and foremost, we're really focused on being a holistic one stop shop for our members to get their money right. So we want to help them get to the point where they're spending less than they make and invest the rest. And when they choose to invest with us, we want to give them a broad portfolio of assets they can invest in. So we've really prided ourselves on giving a complete selection. So we offer stocks without commissions. We pioneered fractional shares. We have four of our own SoFi branded ETFs that were specifically created for the unique needs of our members that want a dollar cost average and be broadly diversified. We also offer IPOs and then alternative assets like private credit, venture capital and long short hedge funds. We used to own or we used to provide cryptocurrency. We were forced to eliminate that when we became a bank. But with the OTC's recent articulation about their rules and interpretive letter, we will be able to reenter the crypto business and offering our members to buy, sell and hold crypto assets. And our goal is to be there in the next six to 18 months and then more broadly provide other products and services that leverage blockchain and cryptocurrency, like lending from a secured standpoint on the back of crypto assets, a SoFi stablecoin with some type of yielding product and maybe rewards. In addition to leveraging infrastructure for other financial institutions that want digital wallets or may want to enter some of the businesses I've mentioned in our tech platform business, being able to serve them in that way. It feels like every time, every quarter that we speak with you, you are adding and growing, but also democratizing investing. And one of those ways is that you are now giving people an opportunity that basically only the big Wall Street guys in the past had. And that was to get in before an IPO, get in on shares of a company before that. And I know that you've expanded your partnership with Templum, which allows people to invest in the Cosmos Fund. And I know that the Cosmos Fund has exposure to Anthropic, the AI chat platform that everybody is looking at as sort of the next open AI if it does go public. So what expansion do you see for that entire business? Sure. Last year, we did our first private company investment opportunity through an SPV, as you mentioned, Cosmo. And that was the opportunity to get exposure to SpaceX. The current one we're offering is for Anthropic. We will continue to bring these unique investment opportunities to our members to give them access to products that previously only high net wealth individuals will get access to. And the two that you mentioned are examples of that. As the IPO market opens back up, we'll be very active in the IPO business as well. And then last, alternative asset offering is very unique in that you can invest in private credit, private real estate and private equity more broadly. It's great to see you, Anthony. Thank you very much. Please come back as we continue to follow what you guys have so far are doing, and that appears to be taking on the big financials. Thank you so much. Thank you for having me on, Liz.