• SoFi Technologies (SOFI) is declining alongside other tech stocks
• Morgan Stanley analysts believe the extension of the federal student loan payment pause could be a near-term catalyst
• SOFI stock has done well, but hold off on buying for now

Fintech disruptor SoFi Technologies (NASDAQ:SOFI) has dropped by 45% in the last six months. Though it indeed has its downsides, it can also provide some benefits that make SOFI stock an enticing buy-the-dip prospect. However, tougher times are ahead, as the federal student loan payments moratorium has been extended through the end of August.

Morgan Stanley (NYSE:MS) analysts Betsy Graseck and Jeff Adelson downgraded SOFI stock and revised its price target to $10 from $18 per share. They now predict the moratorium will end in the first quarter of 2023.

That could delay SOFI stock’s momentum, as borrowers with federal loans do not need to refinance. The extension was also seemingly unexpected by SoFi, which issued upbeat guidance for their first quarter and full-year results and popped the stock.

It caps a dismal few months for SoFi, which has added a host of offerings to its product portfolio and is riding high from the approval of a national bank charter.

SOFI Stock and the Student Loan Moratorium

SOFI stock has been negatively impacted by the pause in federal student loan payments. The stock seemed poised for a reprieve, as the moratorium was originally set to expire on May 1. However, as of today, it has been extended through Aug. 31, 2022.

Millions of Americans have relied on the federal government to ease the burden of student loans with this emergency relief program. Meanwhile, the Senate Education Committee head, Senator Patty Murray, is calling on the government to extend the program until 2023.

What may tip this in favor of an extension is that most voters on the Democratic base have historically been in favor of an extension. According to a Data For Progress survey, nearly 70% of likely voters polled in December agreed the federal government should continue the moratorium.

The majority of Democrats supported the legislation, with 88% backing it. This survey also showed 71% of Independent respondents and 48% of Republican respondents approved.

SoFi Keeps Growing at an Exponential Pace

Legacy financial service companies have been around forever. But they’ve seen new competition in the past few years. SOFI stock cuts a lone figure as an all-in-one neobank. Consumers are looking for convenience in this era. Therefore, having all of your needs met under one umbrella is unique.

The total number of products added in the fourth quarter was 51% higher than those from Q3 and represents the sixth consecutive quarter of triple-digit growth for SoFi. In addition, the recent approval of its new bank charter allows the company to keep deposits and use them for loans.

This will create regulatory clarity and set up a framework for users. The bank charter will allow SoFi to take advantage of soon-to-come interest rate hikes. Its strategy should help it grow its interest income.

All of these positive developments are helping the bottom line. New members have hit a staggering 523,000 quarterly for a 39% sequential increase. Its adjusted net revenue of $280 million was a quarterly record, up 54% year-over-year. Therefore, the company is in a prime position to grow further.

Now that the federal student loan payments moratorium has been extended, investors have to be careful and aware of the risks associated with SOFI stock. For now, it’s best to avoid SoFi Technologies.

On the publication date, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.