The student loan bubble is starting to burst

[n2doc]

By: John Carney |

The largest bank in the United States will stop making student loans in a few weeks.

JPMorgan Chase has sent a memorandum to colleges notifying them that the bank will stop making new student loans in October, according to Reuters.

The official reason is quite bland.

"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.

more

http://www.cnbc.com/id/101012270

[Nuclear Unicorn]

1. Holy f'n wow. This is massive.

[Mnemosyne]

2. Guess they have enslaved enough people to last a lifetime. Criminals. nt

[Bonx]

6. I hate being enslaved...

by seeking out and receiving a loan that is expected to be paid back.

[RadiationTherapy]

9. If that's as complex and nuanced as you are capable of seeing this matter

then that's as complex and nuanced as you are capable of seeing this matter. Others have written eloquently and at length about this very real scam and problem.

[Myrina]

10. +1 brazillion

n/t

[villager]

14. Evidently you *love* being enslaved, if that dismissive snark...

...is the extent of your "analysis" about college costs, family incomes, financial aid cuts, exorbitant bank interest rates, etc...

[dogknob]

15. Fail. n/t

[Mnemosyne]

17. You have no clue what I meant, apparently. nt

[closeupready]

3. Maybe they know something they aren't letting on to...?

That perhaps some kind of legislative change will drastically diminish the profitability of these loans?

[BeyondGeography]

4. Those fields have been plowed under

Next.

[zipplewrath]

5. Private student loans

This is about private student loans. The federal government loans continue. That's probably part of why they "can't grow the business" because the feds are under cutting them badly on rates.

[JPZenger]

7. Private student loans should be stopped

Many of these private student loans are predatory, and have extremely high interest rates.

If you can't fund your college education using only federal loans, work study, summer jobs, savings, etc., you should pick a cheaper college instead of taking out predatory private loans.

The only reason why companies were offering these loans is because under federal law, they cannot be discharged under bankruptcy. If the feds removed that protection (as the Dems sought a few years ago), most of the private loans would disappear, because they are built on a bubble.

[Myrina]

11. "Pick a cheaper college"?

Yeah that's wrong too.
Why should any student suffer because they or their parent is poor?

How about making higher ed more affordable by getting rid of the zillion dollar sports stadiums, by taking the profit out of ripping off students for books and fees, and clean up the ethical issues of schools investing in Sallie Mae et al so they can make money off a student twice - once from tuition and again later off the interest on the loans/stock investments?

[MissB]

19. That's getting harder to do. Limit for freshman for federal loans is $5500/year.

Our state university's cost of attendance is around $22k/year. That includes In-state tuition and room/board.

Work study is usually awarded as a need-based award, so plenty of middle class kids can't get that funding.

Summer jobs and savings may not cover the first year's cost, let alone year two through four. The federal loan limits increase a bit each year - like by $1000. Still not enough to close the gap.

When I graduated from college not quite 20 years ago, pay as you go was really quite reasonable. But paying $3k+/term for tuition is not easy for many folks.

[felix_numinous]

8. Interesting timing

no jobs either, unless you want to go in the military, police or intelligence.

I'm hoping to see more people explore alternative fields and resist recruitment into military.

[Egalitarian Thug]

12. I think we will soon see a movement similar to the Refuseniks (colloquial def.)

wherein significant numbers of people just say "no". The whole student loan scam was another in the long line of terrible republican ideas, implemented by Democrats, and resulting in exactly the failures predicted at the time by those annoying people that have "no credibility", except for a long track record of being right.

[villager]

16. You mean those "Professional Left" types (formerly liberal moderates) who always

...try to warn other Dems from pitifully caving into noxious Republican ideas?

[Egalitarian Thug]

20. That would be them, some of them, anyway.

[Supersedeas]

13. but TIME's priority is to focus on the need to use school resources to pay athletes

at least the proceeds from those loans are being well invested

[JEB]

18. College should be fucking free.

The money we piss away on killing brown people and enraging half the world could send every person in this country who is interested to school. Seems to me we could use a better educated population.

[Arugula Latte]

21. ^ This ^

We have the most effed-up priorities. We could have been a great nation that prized free or simply affordable education and a good healthcare system, but no. We've squandered everything on our military-corporate overlords.