Citing a large drop-off in private student loan originations, a JPMorgan Chase & Co. spokeswoman confirmed Friday that the bank would stop issuing student loans Oct. 12.
“Over the last five years, students have increasingly relied on government-backed loans,” said spokeswoman Trish Wexler. As a result, “we no longer see meaningful growth in this market,” she said.
The lender had already started scaling back its student loan business. In spring 2012, JPMorgan Chase announced that it would limit private student loans to existing customers.
In the last year, the bank saw 12,500 new student loan originations. They represent a fraction of the 64 million consumer customers the bank serves.
Americans have turned more and more to government-backed loans, which are generally cheaper and have more protections, to pay for college and other educational expenses.
In 2010, Congress overhauled the student loan industry, bypassing banks and issuing loans directly to students and their parents.
That overhaul had a large effect on private lenders.
Wexler said that in 2008, the lender originated $6.9 billion worth of student loans. The figure most recently dropped to $200 million in the last year.
Stepping out of the student loan business will allow to lender to focus on other growth areas, such as auto lending, Wexler said.