Chase Cuts Rates, Fees on U.S. Student Loans

NEW YORK (Reuters) - JPMorgan Chase & Co (JPM.N), one of the largest U.S. student lenders, on Monday said it will cut rates and fees on some student loans, as market disruptions and a new federal law cause some rivals to cut back.

Chase Education Finance said it will waive the origination fee on Stafford loans and the 1 percent default fee on Stafford, Parent PLUS and Grad PLUS loans.

It said it will also reduce the interest rate on all three loans by one-tenth of a percentage point if it makes, services and retains the loans.

The changes apply to new loans Chase makes and plans to retain between Dec. 1, 2007, and June 30, 2009, Chase said.

Chase also said borrowers who obtain school-certified Chase Select private loans can receive below-prime rates and will pay no origination and repayment fees for applications approved between June 1, 2008, and June 1, 2009.

Some student lenders have struggled after October's College Cost Reduction and Access Act, which reduced subsidies.

They have also since last summer suffered as investors stopped buying a wide variety of asset-backed securities, including student loans lenders bundle and repackage.

Sallie Mae (SLM.N), the largest student lender, and Nelnet Inc (NNI.N), a large independent lender, last month set plans to curb lending in response to legislative and market changes.

Citigroup Inc's (C.N) Student Loan Corp (STU.N) affiliate and JPMorgan Chase make about the same amount of student loans, trailing only Sallie Mae, according to the Web site FinAid.

(Reporting by Jonathan Stempel; Editing by)