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?
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.
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?
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 to taking out Citibank student loans:
Cons to using Citibank as a lender for student loans:
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.