It actually started a few month ago. We’ve posted this chart a couple of times, but I’ll post it again. It’s a good chart.
Dumping money on students who are sub-subprime is not wise. Would you loan $75,000 to a 19 year old who has never had a job, who has no collateral, and who has never paid a bill? That would be idiotic. But the federal government makes this mistake every day, thousands of times per day, and it has done it for years. And the “private” banks have made similar mistakes too as CNBC reports. Now they are moving out of the business while they can.
“We just don’t see this as a market that we can significantly grow,” Thasunda Duckett tells Reuters. Duckett is the chief executive for auto and student loans at Chase, which means she’s basically delivering the news that a large part of her business is getting closed down.
The move is eerily reminiscent of the subprime shutdown that happened in 2007. Each time a bank shuttered its subprime unit, the news was presented in much the same way that JPMorgan is spinning the end of its student lending.