The market for student loans suffered another blow on Thursday when J.P. Morgan Chase & Co. announced that it is getting out of the business, The Wall Street Journal reported today. J.P. Morgan's departure, effective Oct. 12, leaves Wells Fargo & Co. as the only major U.S. commercial bank still making student loans. Big banks have been fleeing the industry since 2009, when the Obama administration signaled that the federal government would become much more active in making loans directly to students. Since then, banks' share of the roughly $1 trillion student-loan market has shriveled. Private lenders made about $8.1 billion in student loans in the 2011-12 academic year, according to estimates from Moody's Investors Service. Banks and other private lenders now account for only about 15 percent of the outstanding student debt; the U.S. government accounts for the rest. J.P. Morgan derived less than $200 million in revenue from student lending in 2012, compared with more than $6 billion in 2008. Several big banks have exited the student loan business, including Bank of America Corp., Citigroup Inc. and U.S. Bancorp.
