Student Debt: Who is responsible?

Students Pay SLM 9.25% on Exploitative Loans for College - Bloomberg: "Unlike the federal student-loan program, which lets consumers borrow at fixed rates directly from the government, these loans from at least 30 banks and other private lenders feature mostly variable rates that can be more than twice what some people pay in the U.S. program. With college costs spiraling, the marketing and interest rates of these loans are drawing increasing complaints from borrowers and regulators, who say teenage consumers often don’t understand their terms...

Loans from banks and other private lenders make up about 15 percent of the $1 trillion in outstanding student debt, according to an estimate by Mark Kantrowitz, who runs FinAid.org, a website about college grants and loans. About 2.9 million students have private loans, according to the most recent federal data analyzed by The Institute for College Access and Success, an Oakland, California-based nonprofit group.

Now, with college costs continuing to soar, Discover and SLM are both working to expand their student-loan businesses.

“Student lending is a good investment,” said Carlos Minetti, president of consumer banking and operations at Discover. (DFS) “It has an attractive customer base that tends to have higher earning potential and lower unemployment over time.”

JPMorgan, the largest U.S. lender by assets, said in April it would stop offering student loans on July 1 except to bank customers. The shrinking private student-loan market and the government’s expansion into originating federal student loans are behind the bank’s decision, Steve O’Halloran, a spokesman, said in an interview.