NEW YORK — JPMorgan Chase & Co will stop making student loans, according to a document reviewed by Reuters on Thursday, after the biggest U.S. bank concluded that competition from federal government programs limits its ability to grow the business.
The company will stop accepting new applications for private student loans on Oct. 12, at the end of the peak borrowing season for this school year, according to a memo from the company to colleges.
“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 number-one priority, which is getting the regulatory control environment strengthened,” she said.
The decision follows the bank’s move last year to make education loans available only to existing Chase bank customers.
The retail bank has some 64 million customers and 5,657 branches. Last year, Chase made education loans to only 12,500 people for a total of about $200 million.
The company’s student loan portfolio at the end of June held $11 billion — less than 0.5 percent — of JPMorgan's $2.44 trillion of assets.
The portfolio includes $5 billion of private loans and $6 billion of loans backed by government guarantees that were granted under programs that have been discontinued.
The portfolio has been shrinking by roughly $1 billion to $2 billion a year since mid-2010, when Congress acted to bypass the banks and lend directly to students.
Private lending for education declined sharply after the financial crisis, falling from $23 billion in the 2007-08 school year to $6 billion, or less than 10 percent of total student loans, in 2011-12, according to data private lenders have cited from The College Board.