In 2009, Chase Bank had a $15.8 billion dollars in profit from lending student loans, but it started shedding student loans in 2010 after congress eliminated the Federal Family Education Loan program. By the second quarter of 2013, Chase stopped issuing new loans, and in April 2017 it sold off it’s remaining portfolio. What happened?
Without the option to issue Federally guaranteed loans, Chase probably started to see student loans as a riskier option. Perhaps the increasing student loan delinquency rates led Chase out of the private lending game altogether. However, that’s not what Chase said at the time. Instead, representatives of the bank cited a decreasing market for private loans as the reason it stopped issuing them.
Most students depend on Federal student loans, not the private student loans that Chase offered (although it also purchased some Federally guaranteed loans). Add to that the increased opportunity for profit in sectors like credit cards and auto lending, and you can see why the nation’s largest bank decided to let smaller banks take over the student lending sector.
What Happened To Chase Student Loans?
Although Chase stopped issuing private student loans in 2013, it kept them on its books until 2017. In April 2017, Chase sold its remaining $6.9 billion dollar student loan portfolio to Navient.
Any student loan that Chase owned is now owned by Navient. You should be able to find information about your student loan by accessing the information through your online account and Navient login. It is possible that your student loan may be serviced by a loan servicer other than Navient. For example, if your loan was serviced by another servicer prior to being sold, that servicer may still service the loan.
The two previous loan servicers were American Education Services and ACS Education Services which was rebranded as Conduent Education Services. Navient announced that it will take over servicing the loans, but the process may take some time. In the meantime, you should contact your existing loan servicer about any questions related to your student loan.
Don't Like Your New Loan? You Have Options
The portfolio that Chase sold to Navient included Federally guaranteed student loans and private student loans. If your loan was one of the Federally guaranteed loans, you have options for debt relief.
Borrowers with Federal debt can consolidate loans, get on an income-driven repayment plan, and take advantage of Federal grants or student loan forgiveness programs. If you’re eligible for any of these options, don’t give sacrifice the opportunity by refinancing to a private loan. Or, more accurately, don’t sacrifice these advantages unless you can save a lot of money by refinancing (and you know you can make the monthly payment).
On the other hand, half of the loans that Chase sold were private loans. If you want to decrease your monthly payment or find a better interest rate, you may be able to do so by refinancing. Compare rates at multiple lenders before committing to a particular loan option.
Check out our guide to the best places to refinance your student loans. We also recommend using a tool like Credible that allows you to quickly compare your student loan options in just two minutes. Plus, as an added bonus, you can get up to $1,000 when you refinance with Credible.
What Can We Expect From Other Major Banks?
The $1.5 Trillion student loan market is largely comprised of Federally guaranteed loans. Prior to 2010, some of these loans (called FFEL) were owned by private issuers, but the U.S. Department of Education now issues all Federal student loans. Today, lenders, including major banks only issue private student loans. Wells Fargo is the only major bank with a robust student lending division.
The remaining private student lenders tend to be smaller banks or non-bank lenders that specialize in educational loans. Lenders like Sallie Mae and Discover are among the largest issuers of private student loans (though other lenders may offer better rates).
Even though Student Loans are now the largest consumer lending sector, major lenders will likely stay away from the sector unless they can profit from Federally guaranteed loans. The private education loan sector is already very competitive, and unlikely to be a profitable avenue for major banks.
Editor: Clint Proctor
Robert Farrington is the founder of The College Investor and is widely recognized as one of the nation’s leading voices on student loan debt and saving for college. He holds an MBA from UC San Diego Rady School of Management and has spent over 15 years researching, writing, and advising on student loans, 529 plans, financial aid programs, and saving and investing for young professionals.
Robert has been featured in the The New York Times, The Wall Street Journal, The Washington Post, NBC News, and Forbes, where he has been a regular personal finance contributor for over a decade. His work combines both professional expertise and personal experience – he successfully navigated his own student loan repayment journey and has helped thousands of readers do the same.
He is committed to making the intersection of personal finance and education transparent and accessible. You can learn more about Robert on the About Page or on his personal site RobertFarrington.com.