JPMorgan isn’t the first bank to get out of the student loan business: they follow U.S. Bancorp’s decision last year to leave the market. But as of Oct. 12, they will stop offering loans to students, they said Thursday, due to the incredible competition they have with federal lending programs.
“Students and their families are increasingly relying on government-backed loans rather than private student loans, and as a result the market has declined by 75% in the last five years,” said JPMorgan Chase spokeswoman Trish Wexler, as reported by American Banker. “We no longer see growth potential in this market. We’re planning to focus our resources in other businesses where we do see room for growth, like auto lending.”
And though they balked at competing with the Feds, who have all but taken over the market anyway, The Consumer Bankers Association expressed disappointment in this decision and the trend it represents. CBA President and Chief Executive Richard Hunt responded saying:
“This is a troubling trend for students and taxpayers, meaning even less competition in the marketplace. Unfortunately, since the near government takeover of most — about 93% — of the student loan program in 2010, federal student debt has exploded to the tune of over $1 trillion.”
“This is especially concerning since federal loans, unlike education loans made by banks, do not involve an ability to repay assessment. The [Consumer Financial Protection Bureau] and the Department of Education should make college affordability and the federal student debt crisis a top priority.”