Due to a large drop in private student loan originations, a spokesperson from JPMorgan Chase confirmed the bank decided to stop issuing any more student loans starting October 12.
The spokesperson for JPMorgan said that in the past five years, students are relying more and more on loans that are backed by the government. As a result of that, said the spokesperson, they no longer see a meaningful amount of growth in that market.
The financial institute had already begun scaling its student loan business back. During the spring of 2012, the bank announced it would be limiting private student loans to its existing customer only.
Students in the U.S. are turning increasingly towards loans backed by the U.S. government, which tend to be much less expensive, containing more protections to help pay for the schooling as well as other expenses related to their education.
The student loan industry received an overhaul by Congress in 2010. The government started bypassing banking institutions and issued loans directly to college students.
There was a great deal of effect on private banks from the Congressional overhaul of the loan system, because the banks had been bypassed.
JPMorgan Chase, said the spokesperson, originated over $6.9 billion in student loans during 2008. Last year that figure had fallen to only $200 million.
By JPMorgan calling it an end to their student loan involvement, the bank can now focus on new areas of growth, such as lending for automobile purchasing.
The auto industry has experienced a very good upswing this year, reaching levels of sales equal to prerecession figures.
