Citizens Bank Student Loans Review
At the end of 2013, the Consumer Financial Protection Bureau came out with its annual report. Every year this government agency publishes the most common complaints in the “financial marketplace.”
The most common complaints showed a bunch of loan companies were offering students loans, and then refusing to allow refinancing or restructuring the loans. Even when the borrowers had great credit, the loan companies refused to budge.
In response to that report, Citizens Bank, the 13th largest retail bank in the United States, decided to offer refinancing to students and graduates.
Since its inception, Citizens Bank amassed a portfolio of more than $2 billion. If you’re looking for an institution with a solid track record, Citizens Bank may be the place for you.
Citizens Bank prides itself in an extremely low default rate. According to Forbes, their default rate is below 1%. The bank has taken a conservative approach to lending. Instead of making a lending decision on the future earning potential of a borrower, Citizens Bank encourages parents to cosign their students’ loans.
As a result, more than 95% of Citizens Bank's loans are cosigned by parents. Their biggest criterion is whether a student’s parents can afford the loan today.
What does Citizens Bank offer to Potential Borrowers?
Citizens Bank loans can be broken up into three categories: (1) undergraduate, (2) graduate, and (3) parent loans.
If you’re currently an undergraduate, while you can’t refinance, you can qualify for one of their private student loans.
If you dropped out of college, or only earned your associates degree, you can refinance your student loans. You need to have enrolled in an eligible degree program and make 12 consecutive, on-time payments on your current student loans.
If you’re a grad student, or a college graduate, you may also qualify to refinance your loans. This is by far the most common loan given by the bank. If you’ve got a good credit score, and a good job, you may qualify for the best rates.
If you’re a parent to a college student or graduate, there’s a good chance you signed up for a Parent PLUS loan. Citizens Bank allows students to refinance out of this loan, limiting your exposure. However, they also offer a competitive alternative to the Federal Parent PLUS loan, with better interest rates and no origination fees.
Citizens Bank offers a full deferral if you decide to re-enroll in school. If you’re enrolled at least half-time, no principle or interest is due until six months after you graduate. Interest will still accrue though. Instead of deferring your loans, Citizens Bank also offers the option to make interest only payments while you’re in school.
All Citizens Bank loans have terms of 5, 10, 15, or 20 years. Rest assured, if you qualify, you’ll qualify for a term that makes the most sense to your budget.
Interest rates for Citizens Bank are competitive. They have both variable and fixed rates, and they range from 2.17% to 8.89%.
Finally, Citizens Bank also offers some interest rate discounts. If you or your cosigner has a qualifying account at the bank you can get a 0.25% reduction. You can get an additional 0.25% reduction if you sign up for automatic payments.
Citizens Bank's Eligibility Requirements
Since Citizens Bank is regulated by the Consumer Financial Protection Bureau, it is required to follow all relevant federal laws. So, in order to qualify, every borrower needs to be at least 18 years old, a U. S. citizen, legal permanent resident, or resident alien, and have attended a Title IV accredited school. If you’re a resident alien, you must apply with a cosigner, and the cosigner needs to be a U. S. Citizen or permanent resident.
In addition to these requirements, your loans need to be in repayment, and you can’t currently be attending school. If you haven’t earned a bachelor’s degree, because you of a decision to either stop attending school or only earning an associate’s degree, you need to have made at least 12 full, on time payments on the loans you want to refinance. You also need to have at least $10,000 in student loans.
As for credit requirements, like we said earlier, the best chance you have to get approved for a Citizens Bank loan is to have a cosigner. Your credit-worthiness is determined by a combination of your credit score, and a minimum annual income of $24,000. Keep in mind that these requirements apply to borrowers and their cosigners.
How to Apply
After you take their four question survey, if you qualify, you will be able to apply for a loan. You’ll need to provide your social security number, your gross monthly income, your employer’s name, phone number and your length of employment, and your monthly rent or mortgage payment.
You will also need to provide the following information about your current student loans:
· Your full account number
· The current loan balances
· Your monthly payment amount(s)
· The next payment due date
· The interest rate
· The loan type.
Once you complete the application, Citizens Bank will run a credit check and verify your income and existing student loans. Then, they’ll get back to you and let you know if you have been approved or not.
Citizens Banks does not charge an origination fee on their refinance loan. They also don’t charge a prepayment fee. However, if you payment, or any portion of your payment more than 15 days late, you will have a late charge of 5% of your payment amount.
Your best rule of thumb is to ask as many questions as possible up front, and communicate with the bank if you’re having trouble with your account.
Once you’re approved, you will close on the loan and sign a promissory note. Then Citizens Bank will pay off your old loans, and you will begin making monthly payments on it immediately.
Citizens Bank is a great option if you can’t get qualified with another student loan refinancing company. While they do have competitive interest rates, their rates are higher than institutions like SoFi or Earnest.
You will probably need to have a cosigner, just based on the numbers. However, you can at least rest assured that the bank is stable, since it’s been around for almost 200 years.