Is this an isolated business decision or the first domino to fall? Discuss.

Halah Touryalai of Forbes reports.

JP Morgan Shuts Down Student Loan Biz

There will be one less player in the student loan business this fall.

Later today JPM will notifying colleges that come October 12 it will no longer accept applications for student loans.

The move follows JPM’s spring 2012 announcement that it would only accept student loan applications from existing Chase customers. Now it’s moving forward and ending the business all together.

The bank believes there’s no major growth potential for the unit as competition from the federal government increases. Previously, federal aid was given to students through banks but in 2010 the government began lending to students directly cutting out banks from the process.

JPM made $200 million in student loans last year compared with $6.9 billion in 2008.

The bank’s total student loan portfolio holds $11 billion. The bank would not comment on whether it would keep or sell the loan portfolio.

Sallie Mae is the biggest private student loan provider. Wells Fargo WFC -0.93% and Discover, which was sold by Citi, also remain in the game.

Moving out of the student loan business gives the bank room to invest in other areas like auto lending where it expects to see major growth, the bank said.

JPM is facing a slew of investigations by regulators and prosecutors since its massive London Whale trading loss in 2012. In its quarterly SEC filing last month the bank said it’s being investigated by criminal and civil divisions of the U.S. Department of Justice. A federal bribery investigation is looking into whether JPM hired the children of Chinese officials to help it win business.

Big banks have been winding down and selling business units that no longer make sense under new regulations.