JPMorgan to Restrict Student Loans to Current Customers

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JPMorgan Chase & Co. (NYSE:JPM) has announced plans to restrict its offers of student loans to those who are customers with the bank. The move will come into effect on July 1st in time for the initiation of the new school year. The latest move is one of many in a continuum that has seen the company retract its self from the student loan market in recent years. The statement announcing the new restrictions on student loan applications cited the declining size of the market and the increasing government presence as reasons for their decision.

The move will see a cessation of loans to individuals who do not already have a relationship with the Chase group. In order to qualify for a loan from the bank after the deadline a customer must have an account with the company. A loan or a credit card with the bank will also qualify a candidate for a student loan. The restrictions will probably reduce the number of candidates for loans with the bank and increase the security of the loans it issues in future as clients with existing relationships are likely to be more reliable.

The student loan market has been the center of some controversy and debate recently as its value has rise though many are concerned about the level of bad loans inherent in the market. Student loans are now the largest segment of private loan market in the United States. The inflation that has taken place in the last decade has led many to speculate that the market is in a bubble that could burst at any time. Under the auspices of that speculation it makes sense to get out of the market or at least minimize exposure to it.

JPMorgan is not into the student loan market in a big way and has been removing itself further as time has gone. The company made $300 million off of student loans in 2012 a large fall from $1.9 billion in2011 and $4.2 billion in 2010. As analysts continually come out with negative expectations of the market the trend of larger financial institutions withdrawing from the market leaving specialist institutions in their place. These may not have the same standards as the larger firms and the Consumer Financial Protection Bureau is studying the market in order to ensure customers get a fair deal.

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