JPMorgan Chase has decided to get out of the student loan business, after the bank concluded that competition from federal government programs and increased scrutiny from regulators had limited its ability to expand the business.
Reuters reports that JPMorgan, which already restricted student loans to existing Chase bank customers, will stop accepting applications for private student loans on 12th October, at the end of the peak borrowing season for this school year, according to a memo from the company to colleges that was reviewed by Reuters on Thursday.
Final loan disbursements are expected before 15th March 2014.
'We just don't see this as a market that we can significantly grow', said Thasunda Duckett, chief executive for auto and student loans at Chase, in an interview.
Not making more loans 'puts us in a position to redeploy those resources, as well as focus on our No. 1 priority, which is getting the regulatory control environment strengthened', Duckett said.
JPMorgan's decision comes after Congress acted in mid-2010 to bypass the banks and have the government lend directly to students. The federal government now issues 93% of student loans.
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image: © Brad Flickinger