JPMorgan Chase CEO Jamie Dimon said student lending has been hurting America since 2010.
Dimon is criticizing the government for issuing $1 trillion student loans and that colleges and universities must have their own loans that students can take.
In an interview with Yahoo News, Dimon said, “Universities should make good loans that people need to get them to where they’re going and get them good jobs at the end.” When asked about what needs to be done with the current student lending scheme, Dimon responded, “I think they should look at all parts of student lending, fix the broken parts, and then forgive those people who need forgiveness.”
According to Forbes, this year, about 44 million borrowers owe the government $1.5 trillion of student debt. Given this huge amount, student debt ranks second on the highest category of consumer debt, following mortgage.
A data from the Institute for College Access and Success showed that the class of 2017 is reported to pay an average of $28,650 for student loans, getting in trouble with personal finance.
Dimon also mentioned that ‘irrational’ student lending has been impacting the economy and that the government should take action.
“The impact of student debt is now affecting mortgage credit, and household formation—a $1,000 increase in student debt reduces subsequent homeownership rates by 1.8%. Recent research shows that the burden of student debt is now starting to affect the economy,” said Dimon.
What Dimon is suggesting is better underwriting standards on student loans. Since the government largely owned these loans, banks should have responsible lending policies.
In all of the United States, Connecticut has the highest average student loan debt per student, about $38,510. Meanwhile, Utah has the lowest student debt with only $18,838 per person.