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Jpmorgan Chase / student loans

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My son is a freshman at college, and though we were willing to help pay for his expenses, he wanted to do this on his own. So he applied to three banks for loans: Wells Fargo, Chase, and JP Morgan Chase.

Wells Fargo declined his application without a cosigner. (They will soon be handling all my banking needs, by the way.)

The two Chase banks agreed to give him loans, although their website says "Private loans may require a borrower to have reasonably good credit, as well as have a co-signer in most circumstances, " and "a co-signer is typically necessary for undergraduate students to qualify." (It says basically the same thing at least three other times.) For some reason, my son was an exception to needing a cosigner. When I asked why, I was told that it was because he has good credit. My question now is: why, if he has good credit, was he given loans on these terms?

Here are the terms of one of the two (they are similar): he borrowed $16, 696.18 at 9.93% interest with an index of 5.00 and a margin of 5.50. Based on the total payment amount, his effective rate seems to be 18.9%. This loan is also variable, which--although I have been told this is the norm now--I still find appalling.

So near as I can tell here is what happened: My son walked into the bank (apparently with the word "sucker" stamped on his forehead), and sat in a chair, where one single bank representative assisted him in acquiring over $33, 000 in student loans over the phone. (So although these loans seem to be from two "different" banks, the person assisting him knew exactly how much he was taking out.)

Bottom line: my son, before even setting foot on campus, will owe over $120, 000 when he graduates. IF he doesn't take out any more loans. IF the interest rate doesn't go up. (Wanna take a bet on that one?)

My son is 19. Yes, he is a legal adult. Yes, these loans are legal. But when he walked into that bank, they took advantage of him in every possible way. A "reasonable" amount to take out for a student loan is $5, 000. (They actually TOLD me that at the bank the first time we went in.) But there is nothing "reasonable" about these loans. I don't know how they could have made them any worse.

My son will have to be accountable for being stupid. I'm not letting him off the hook. But I want to know if I have any recourse to holding the bank accountable for being UNETHICAL. Just because this was "legal" doesn't mean I intend to let them off the hook, either. Any suggestions?
Ca
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Ch
  17th of Oct, 2008
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I work in a financial aid office at a private college and have just met with our Chase Bank rep. He told me that the highest possible rate for a student who applies for a Chase Select loan without a cosigner is prime plus 6%. If the student has a cosigner it could go as high as prime plus 5.5%. Are you sure about the rate that he was given? Was it called the Chase Select loan? They do have other private education loans as well. And it is true that 99.9% of private loans have variable rates. I did have a student who found a private loan through her own state's guarantee agency that had a fixed rate. You could always have him get another private loan elsewhere and have the Chase one returned. The financial aid office at his college can help him with this but they will most likely require that the new funds be there first before they will return Chase's funds.

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Chase Bank / JPMorgan Chase Bank Logo Chase Bank / JPMorgan Chase Bank
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270 Park Ave
New York
NY
United States - 10017
+1 877 242 7372
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