JPMorgan Chase Pulls Out Of Student Loan Market

JPMorgan Chase will stop extending student loans to new customers starting in July, American Banker reports.

The largest bank in the country is pulling out of the student loan market.

JPMorgan Chase will stop extending student loans to customers without an existing financial relationship with Chase on July 1, JPMorgan Chase spokesman Steve O'Hallaran told The Huffington Post. This means that only existing Chase customers -- such as student loan borrowers and customers with a deposit, loan or credit card from Chase -- can apply for student loans, O'Hallaran stated in an e-mail.

U.S. Bank -- a Minneapolis-based bank with 3,000 branches -- also stopped accepting new student loan applications at the end of March, according to American Banker.

O'Halloran declined to comment to The Huffington Post about JPMorgan's share of the student loan market or how much money JPMorgan was losing in the student loan business.

"We have decided to focus on providing private student loans only to current Chase customers as the private student loan market has continued to decline and government programs have expanded to help more students and their families," O'Hallaran stated in an e-mail.

The bank exits come as the new Consumer Financial Protection Bureau heightens its scrutiny of private student lenders. The bureau started accepting student loan complaints last month and said it expects complaints about "difficulties making full payment; confusing advertising or marketing terms; billing disputes; deferment and forbearance issues; and debt collection and credit reporting problems." Private lenders tend to charge higher interest rates than the government does.

As the feds crack down on private lenders' excessive fees, student loan borrowers are having a harder time paying off their loans, making student loans less profitable for banks. The percentage of student loan borrowers that defaulted by the second year of repayment has doubled since 2007 to 8.8 percent in 2011, according to the Department of Education. And 14 percent of all student loan borrowers -- or 5.18 people -- are in default, according to the Federal Reserve Bank of New York.

U.S. student loan debt now exceeds $1 trillion, and it is the largest source of unsecured consumer debt in the country, surpassing credit cards, according to the Consumer Financial Protection Bureau. Bankruptcy cannot wipe away student loans in most cases.

A shrinking student loan market may be bad news for student loan borrowers. For one, less competition leads to higher prices and a worse deal for customers. Students also are likely to have fewer options for financing their college educations as colleges raise tuitions and slash financial aid. Most undergraduates can borrow up to $31,000 in Direct Stafford loans from the government.

From our partners

• How To Get Away With Being Bad At Your Job - The Billfold
• The Sharing Economy - LearnVest
• Uninsured: How To Get Health Care Without Insurance - The Billfold

Comments

[zaby]

06:22 AM on 06/02/2012

After going through this post I got latest news about JP Morgan Chase bank. Bank has announced that existing Chase customers can only apply for student loan. This post should be read by all scholars. http://www.privatestudentsloans.net/

[montanasian]

09:59 PM on 04/21/2012

JP Morgan Chase- I would like to see that you not get out of the of the student loan business in the manner that you doing. It seems to be a not a good marketing plan at this point in time. Please reconsider.

[mlaiuppa]

07:36 PM on 04/16/2012

There's your next bubble.

If Chase is getting out, that bubble is going to burst soon.

[rwaller]

10:52 PM on 04/11/2012

This is just about cutting their past practice losses. Now that the investigation into their past actions have begun they can not undo what they have done. They can however mitigate future damage by restricting their exposure. Theives circling the wagons.

[baker80]

06:28 PM on 04/11/2012

New way to do college

1) go to community college and get an associates degree and work and live at home
2) transfer to a four year school to get bachelors degree and don't forget to get involved on campus

[monilove42]

11:25 AM on 04/12/2012

I agree. Most community colleges have transfer credit programs with good universities now.

[gavrielle]

02:09 PM on 04/11/2012

The whole private bank run student loan thing was rammed down American throats by the Rockefellers and their bankster buddies back in the 1970s. Until then, the country was moving toward FREE college education for qualified resident students at local community colleges and state universities. Anyone remember California and New York? But the Rockefellers believed that if you got people into debt early, they'd be in debt for the rest of their lives and paying their banksters, er, bankers, a hefty portion of their income until the day they died. A college education ought to be an avenue out of poverty, not an introduction to financial distress.

[ebanks84]

09:26 AM on 04/11/2012

Good riddance!

[white mende man]

05:29 AM on 04/11/2012

Some banks are simply Too Big to Care.

[loki]

03:12 AM on 04/11/2012

also, if you have an account , say savings, checking, credit, with the same bank you have a loan with, that bank can legally withdraw money owed from any of the accounts without your permission. This is why you should never have your loans with the same place your bank accounts are , unless you are without a doubt you can always make payment. Not all banks wil do it, but they all have the legal right to do it if they want too.

[Muhtadi]

01:33 AM on 04/11/2012

HOW DARE they pull out of the student loan business! Get back in there and start giving us more of the SAME loans (the ones we cannot afford to pay back and for things we really didn’t need) which we protested against last week and deemed “predatory” so we can have something to protest/blame next week after we default on these new loans!

Seriously – how powerful are the toxins in liberalism where this obvious hypocrisy can go unnoticed?

Meanwhile government will of course continue its long standing reign over the student lending market and make sure all those kiddies stay flush with cash so their voting machine buddy, Education Incorporated, stays happy by being able to jack up tuition prices even more and pick the kids pockets until they become jobless , indentured slaves. Why are people still so protective about the US education system and politically based loan programs. ? Those are the guys rolling around in your money – not banks.

[white mende man]

05:41 AM on 04/11/2012

I remember the people/tax payers bailing out big banks to the tune of over $800 billion. And what did we get for our troubles, more fees to keep an account open. Probably these students that had a hard time paying back their loans now work for the very industry that gave them the loans in the first place. Remember, an educated population is the driving force behind a thriving and stable country. Keep thinking small trying to suppress an good quality education for the people and someday you'll find the country in 3rd world status. It is not survival of the fittest, it is survival of the country as a whole that counts.

[Muhtadi]

09:48 AM on 04/11/2012

You remember tax payers bailing out banks to the tune of over $800 billion??
Oh Really? Can you please find for me the receipts which prove this $800 billion was paid for by “ax-payers?” Of course you can’t, because nobody pays for anything any more, we just put it on our tab!

Yes, that tab eventually has to be paid down but guess what – it is NOT going to be the “poor” (bottom 50% of Americans) who will be on the hook for the “800 billion” (nor the trillions in “bailouts” the poor have received directly through wealth redistribution plans over the years)

We don’t need any more people with college degrees in Art History with 200K in loan debt backed by taxpayers. We need plumbers, welders, electricians, skill labours.. etc.. NOT the fancy-pancy “college degree job” we have been programmed by the education lobby to think we need to survive.

It IS survival of the fittest – it always HAS been survival of the fittest - unless of course liberalism now believes it holds the power to alter the existing laws of nature (including climate control)?

You need diversity amongst people/groups at the most local levels possible. You may think you can row the boat faster if everyone jumps aboard the same boat but your failing to consider what happens if the strong rowers become fatigued and the boat starts talking on water.

[Nightangle]

10:49 PM on 04/10/2012

College was a given.. Mom and Dad paid most of our tuitions. They had 2-3 jobs to put us through the best University they can afford. Still, I had a $40,000 unsecured student loan, and so were my 5 brothers. It must have been very difficult for them, but they did the best they can.

I graduated with a BS in Mathematics and Applied Sciences. I had a paid internships for 26 weeks, thereafter, hired permanently as a Junior Statistician. I received Payment Coupon book from the AES, $428/mo for 25 years - max period to repay the entire loan.

Aside from a full time job, I tutored Algebra, Trigs, Calculus and Statistics to undergrads $75.00 during mid term- $100-125 during finals. I paid off my student loan in 4 years - $918/mo + interest, with credits for unearned interest.

My degree is very marketable, but to be a professional Statistician and Actuary, Certifications for Mathematical Statistics, admission to the American Statistical Association, International Assc of Statisticians, completing examinations and memberships of Society of Actuaries, International SC Actuaries are required.

Lots of schooling. I do not know of any professional statistician or actuary who is unemployed or complaining about wages and compensation.

I would not be able to write a novel, but numbers are my comfort, they speak to me in a more eloquent tone. Mathematics pays my mortgage, paid off my student loan and car note.

No thanks to banks.

[Muhtadi]

12:54 AM on 04/11/2012

[“I would not be able to write a novel, but numbers are my comfort, they speak to me in a more eloquent tone. Mathematics pays my mortgage, paid off my student loan and car note.

No thanks to banks.”]

No thanks to banks? Was your “car note” a tax-payer secured loan from the federal government? :)

Really though, you should be proud of your accomplishments. You went out there and worked your butt off and made responsible, informed decisions and that is why you are a success.

Unfortunately, I fear far too many kids out there today expect to just show up and get(deserve/entitled to) a prize.

[monilove42]

11:30 AM on 04/12/2012

You're lucky most people have math phobia...and by the way I'm presently taking a course in Statistical Methods can I ask you a question? j.k. Congrats.

[Nightangle]

08:20 PM on 04/12/2012

And it shouldn't be. Mathematics should be treated as important as any field of study - Social Sciences, Pure Sciences, Arts, Literature etc.

Dad emphasized the importance of practical Math. He is not a great believer of route memory - memorizing multiplication table without understanding the pattern of logical progressions is useless; Math application in every day living is the key.

In my opinion, Math must begin in early childhood. Basic mathematical operations should be made fun and challenging. Then the ability to deconstruct fractions, percentages, rates, ratios to Algebra, Geometry, Calculus, to data and Statistics, Probabilities can as fun and enjoyable as Shakespeare and as beautiful as Moonlight Sonata by Beethoven or the Beatles' Imagine. In fact, understanding Math is also understanding musical keys. Mathematics is amazing.

Our Elementary Education is missing the point. That Mathematics should only be for "honor students" is segrationist and elitist. THEY ARE SO WRONG. With today's technology - math is even more invaluable. We have a population of Math phobic. Shame.

Statistical Methodology is about 3-semester-study with the basic prerequisites Stat I,II. Limit the subject matter. If you are interested, I can refer you to the Institute of Mathematical Statistics.

Thanks for your interest.

[Janzee12000]

10:29 PM on 04/10/2012

*POP*

[artgurrl]

09:08 PM on 04/10/2012

The student loan market is imploding. This is only the first sign.

[marinatha]

08:38 PM on 04/10/2012

1 trillion dollors.....how many lifes have been touched by these student loans. Pay for school in cash that is saved up.It will take longer, you may decide it is not worth it.But the none the less you will be able to have a LIFE.There are more educated people in the USA now than ever before.And not enough jobs.Sounds like some serious odds to me.You can still get where you want to go outside the student loans...

[artgurrl]

09:09 PM on 04/10/2012

Better yet, education should be free for all who want it. No matter the job market, having an education gives a person far better odds at getting a decent job than not having one.

[Kiwi2375]

07:59 PM on 04/10/2012

This is really going to hurt I assume the private colleges and more pricier ones where tuition is $30K + a year or so. Or at least the only people who will be going to those sorts of institutions will be very very wealthy. Perhaps this is a good thing for state and cheap public universities/community college where students can just about pay off their tuition with stafford loans/pell grants. I dunno if it will nesseciarily drive the cost of college overall down...doubtfull but there will be a wide gap between who and how someone can attend what university!

[artgurrl]

09:10 PM on 04/10/2012

Public schools such as the UC system in California now cost just as much as a Harvard education today.