Private Student Loans From Citizens Bank – Pros and Cons
If you’re like a lot of students entering college today, you’ve probably found that your federal student loans don’t quite cover the cost of attendance. They may cover tuition and most of housing, but you still have to think about your meal plan, books and supplies, and other incidental costs associated with going to college. Fortunately, you have options when it comes to private lenders like Citizens Bank.
While the maximum loan limits for federal financial aid have stayed constant for several years, the prices of tuition and other fees have not. So, while you should still fill out a FAFSA and get as much assistance from the government as possible, you probably also need to look into private student loans. But which one should you go with? What do you know about the different lenders and what they can and can’t do for you?
Citizens Bank is one of the big players in private student lending, and a lot of students choose them every year simply because the name is familiar and the institution isn’t likely to go anywhere in the next few years. But are they the best deal? Let’s take a look at Private Student Loans from Citizens Bank, their borrower benefits, and the pros and cons of working with them.
Pro – Low Interest Rates
First of all, students are most concerned about their interest rates when it comes to their loans. With private student loans from Citizens Bank, you can choose between a fixed or variable rate loan. Variable rate loans range from 2.56% to 8.16% and change yearly with the market. Fixed rate loans, on the other hand, range from 4.99% to 10%, and will never change in the time you’re paying on the loan unless you consolidate and/or refinance your loans.
These rates are actually very competitive, not only with other private lenders, but also with federal loans. After all, PLUS loans are actually capped at 10.5%. So, even in a worst-case scenario, where you got the worst possible fixed rate interest from private student loans from Citizens Bank, you still would not reach the maximum interest rate for a federal PLUS loan.
Con – Mandatory Waiting Period for Cosigner Release
On the other hand, if you are a student, and you want to get a loan from Citizens Bank, you are most likely going to need someone to cosign with you. This isn’t uncommon, but it can be frustrating. Some reviewers have been particularly annoyed by Private Student Loans From Citizens Bank’s mandatory 36-month waiting period for cosigners to be released from their loans.
That said, we have seen instances of lenders that don’t release cosigners until you’ve made 48 monthly payments on time and in full. In our experience, 36 months is actually about average as far as cosigner releases go, but if you want to avoid having someone sign with you or if you want to make sure that your cosigner can walk away as soon as possible, this may not be the lender for you.
Pro – Discounted Interest
If you choose Private student loans from Citizens Bank you can get up to 0.5% of your interest knocked off if you just do a couple of simple things. You can get 0.25% taken off if you or your cosigner has a qualifying account with Citizens Bank. You can get another 0.25% taken of just for signing up for automatic payments each month. With those discounts, you could take your already low interest rate and drop it significantly farther.
Con – No Protection for Unemployment
Finally, while private student loans from Citizens Bank does offer different repayment options, they do not offer any kind of protection for unemployment or financial hardship. If you lose your job, you will still be responsible for paying off your student loans each month. If you fail to do so, they will be sent to collections, and you’ll have to deal with all of the problems that come with a default loan.
This is actually very common with private student loans. While you can often hope for a deferment on your federal loans in times of unemployment, during military deployment, and under other extenuating circumstances, that’s not often the case with private student loans. That said, if you plan ahead and are careful with your savings, you should be able to choose a repayment plan that will work for you.
For example, with a 15-year repayment plan, you can choose to start making regular payments – usually between $90 and $110 per month – while you’re still in school. You could also choose to start paying only on your interest during school, with regular payments after you graduate ranging from $91 to $118 per month. Or you could defer payments until after you graduate, with a slightly higher interest rate and payments of $126 to $174 per month.
There are a lot of options available, and private student loans from Citizens Bank offers quite a few great borrower benefits, if you can plan and make arrangements to pay on your loan even in the case of unemployment or financial hardship.
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