Student loans are loans designed to help students cover the costs of post-secondary education. This can include tuition, supplies, living expenses, books, and more. For many, they are an essential tool and a necessary step to take in the process of obtaining a college degree. However, it can sometimes be difficult to determine what type of loan or what borrower is right for you. You may have heard about Citibank student loans as one way of financing your education, but there are some important things you need to know about these loans.

For many college students, applying for a student loan is one of the first mature financial decisions they've ever made, and that decision is not something to be taken lightly. There are interest rates to consider, repayment plans and to think about, and various other factors that college students have to consider before taking out a student loan.

As with most serious financial commitments, there are an abundance of loan companies, regulations, and details to contend with, so it becomes hard to determine what is a fair and beneficial contract. We understand the difficulty, skepticism, and confusion that student loans bring. It is a large part of the territory, but it doesn't have to be. You can take charge of your finances and make the most informed decision. To help you get there, we've compiled a list of information about Citibank student loans.

We've put together all the information you need to know about the former student loan lender Citibank, including what and who they were, pros and cons of these loans, and information on what happened to Citibank's student loans. Here are things you need to know about Citibank Student Loans.

What Were Citibank Student Loans?

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Before we delve into the Citibank Student Loans, here is some background on who Citibank is as a company and what services they once did and continue to offer. 

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What Is Citibank?

Citibank is a popular financial services company founded over 200 hundred years ago in 1812. The company began as Citibank of New York, but after some time, and a few name changes, they settled on Citibank. The company has over 1,000 branches spanning the country that offer banking services to their valued customers. Besides traditional banking, Citibank also assists customers with credit cards, investments, and loans.


Citibank Student Loans


When Citibank student loans were available, students could either choose a federal loan or a private loan to pay for their post-secondary education.


Students and their parents who opted for a federal loan through Citibank could choose from a variety of financial aid options, including the Federal Direct Stafford Loan, Federal Direct Consolidation Loans, Federal Direct PLUS Loan for Graduate and Professional Students, and the Federal Direct PLUS Loan for Parents.


The company also offered a private loan called the CitiAssist Loan with six options to choose from depending on a student's major.

Why Does Citibank No Longer Offer Student Loans?

Now that we've established just what Citibank student loans were, let's consider why they are no longer available.


As of 2010, Citibank no longer has a student loan unit. The company sold off its student loan division to Discover, Sallie Mae, and two additional private student loan providers. As a part of this deal, an estimated 28 billion dollars of Citi's student loans went to Sallie Mae, and four billion went to Discover. The company lost around 500 million dollars from the sell.


Several factors led to Citibank discontinuing their student loans. One large factor was the company saw their private student loan originations drop by 52%. In addition to this, the recession played a big role in the downfall of the Citibank student loan division. Before the recession, being a loan lender was a profitable venture. In fact, Citibank once was one of the largest student loan divisions. Their lending service, The Student Loan Corp., was second only to Sallie Mae.


However, once loan lending decreased and restrictions increased, the company decided to cut their losses. Around this time, the company had to pay nearly 13 billion dollars in compensation the federal government in order to avoid declaring bankruptcy.

What Were the Pros and Cons of Citibank Student Loans?

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As with most financial commitments and ventures, there are pros and cons to be considered. That is why we've researched and compiled a list of the information you need to know about Citibank Student Loans.

Pros

  • Citibank student loans were popular for a reason. As mentioned earlier, Citibank offered both private and federal loans, making it versatile and accessible to all. Their private loans were also tailored toward the educational path the student was on. This allowed students to make the most out of the loans and maximize the quality of their experience.
  • For example, for undergraduates, Citibank offered the CitiAssist Undergraduate Student Loan. With this loan, undergraduate students could have a cosigner, qualify for low-interest rates, defer payments until after graduation, and deduct interest rates for taxes.
  • Citibank also offered five different student loans for graduate students. The company tailored the CitiAssist Residency, Relocation, and Review Loan and the CitiAssist Health Profession Loan to graduate health professionals and medical students. With these two forms of financial aid, graduate students could maximize their loan experience while pursuing a medical residency or completing their board certifications. These students could potentially borrow up to $18,000 dollars as they pursued their education.
  • Two other private loans that were available were the CitiAssist Law Student Loan and the CitiAssist Bar Exam Loan. They were designed for graduate students pursuing a career in law. Law students who were then studying for the bar exam could borrow up to $15,000 worth of loans to cover their living and learning expenses.
  • Finally, the CitiAssist Graduate Student Loan Program covered the post-secondary education financial needs of all other graduates.

Cons

  • It has been nearly 10 years since Citibank discontinued its student loan service, but many students are still being affected by the change.
  • Since the company's student loan division ended, the company has faced investigations regarding illegal practices. Many accuse Citibank of inflating interest rates and overcharging borrowers for their monthly loan payments. In fact, five years after the student loan services ended, the Consumer Financial Protection Bureau announced an investigation into the company. This event made history as this investigation was the Consumer Financial Protection Bureau's first action ever taken regarding student loans.
  • Unfortunately, today a simple Google search will show numerous reviews of Citibank Student loan complaints and grievances. Many customers claim to have been overcharged, experienced poor customer service, and some have even had their payments lost by Citibank.
  • After two years of investigation, in 2017, the Consumer Financial Protection Bureau came to a consensus. Citibank faced serious enforcement action because of how the company handled student loans. The Bureau required Citi to pay back over $3.75 million dollars to their former customers.
  • Beyond financial manipulation, closing their student loan service caused another large rift. For many students whose loans were sold in 2010, it has been hard to stay on top of what is owed and even who actually owns the loan. The hard reality of the situation is that many students were at the mercy of a new servicer and had no control over what would happen to their loans.
  • This created additional work, headaches, and financial issues for many. For those still dealing with their former Citibank student loans, refinancing may be a good avenue for financial stability. Eligibility for refinancing differs per lender. Typically, one must have a max debt-to-income ratio of 40% and a minimum credit score of 660.

Benefits 


Pros to taking out Citibank student loans:

  • Accessible to everyone
  • Deferment Available
  • Low-Interest Rates Available
  • Choice of federal, private, and parent loans
  • Tailored to education
  • Tax deduction possibilities
  • Wide borrowing Range

Detriments


Cons to using Citibank as a lender for student loans:

  • The Consumer Financial Protection Bureau has investigated Citibank​​​​
  • Received enforcement action
  • Accused of losing payments
  • Accused of overcharging
  • Accused of inflating interest rates
  • Accuse of negligent poor customer service
  • Customer confusion

Conclusion

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Citibank is an established financial services company dedicated to helping their customers financially with things such as lines of credit, credit cards, personal loans, mortgages, and commercial loans. Established in 1812, Citibank has over 200 years of experience in the financial realm. Their lending service, the Student Loan Corp., was once one of the largest student loan lenders and a competitor of Sallie Mae. However, due to a recession, an increase in credit restrictions, and a decrease in loan lending, the company decided to end their involvement in student loan servicing.


The company sold off its student loan division to Discover, Sallie Mae, and two additional private student loan providers. As a result of this event, Citibank no longer offers their federal or private student loans.


Students looking to take out a loan will need to look for another lender. Students who formerly took out a Citibank student loan before the service was ended can look to Citibank's customer service line, FAQ's, and the information listed on their website to help them learn how to pay back their loans.

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