JPMorgan Chase CEO Jamie Dimon, in his annual letter to investors, blamed the federal government for the rise in default rates for student loans.
Since 2010, when the government took over student lending, direct government lending to students has gone from approximately $200 billion to more than $900 billion – creating dramatically increased student defaults and a population that is rightfully angry about how much money they owe, particularly since it reduces their ability to get other credit.
Student loan experts disagree with Dimon's analysis. The bank-based Federal Family Education Loan (FFEL) program was phased out and replaced with the current Direct Loan program as part of the Health Care and Education Reconciliation Act of 2010 signed into law by former President Barack Obama.
"It is inaccurate to suggest that the federal government has managed the Direct Loan program any better or any worse than the FFEL lenders did," said Mark Kantrowitz, vice president of strategy for college and scholarship search site Cappex.com. "The percentage of Direct Loan dollars in default is similar to what it was under the FFEL program prior to 2010."