Continued increases in the costs of funding a college education means more students are relying on private student loans to cover any additional expenses after federal loans and financial aid options have been exhausted. It is always recommended that students’ comparison shop before selecting a private lender and give consideration to a number of variables.
The key points to look for when choosing a loan are the interest rates levied and any fees. Most students will also require a responsible co-signer to stand as guarantor for a loan so attention to the conditions of a co-signer release is also important.
Citi Bank offers the CitiAssist Loan for Undergraduates. The loan scores well as it applies no origination fees and no prepayment or early payment fees. Repayments will be based on the interest rate alone rather than interest plus fees. Repayment terms are up to 15 years but it is prudent to remember that the shorter the term of the loan, the less interest will be paid overall.
Students do not need to make loan repayments until six months after graduation due to the six months grace period. There is the choice of making interest only payments whilst in college. Students who can afford to make monthly interest payments are recommended to do so. By making regular payments it will help to establish a credit history, in addition to reducing the total amount of interest to be repaid over the term of the loan. If interest payments are not made during college then the interest is capitalized and added to the principal balance of the loan.
Co-signers are required in most cases unless a student has already established an excellent credit history. Citi Bank requires co-signers to earn a minimum annual income of $18,000. The bank offers co-signer release after 24 months of consecutive, on time payments, which is a shorter term than many other loan providers’ demand.
The interest rates on the CitiAssist loan range from 3.5% APR to 9.25% APR. Interest rates are variable and based on the LIBOR. At the time of writing Citi has not yet joined the ranks of several private student loan providers that are offering the security of fixed rate loans. The interest rate applied will be based on personal credit and the credit of the co-signer.
An interest rate reduction of 0.25% is offered to those who elect to pay via Citi’s auto debit payment program. There are options for forbearance and deferment but students are advised to inquire if there are any fees applied to these options, before signing for a loan.
The CitiAssist Undergraduate loan compares favorably to other private student loans on the market, with the absence of fees an attractive plus point. It is important to compare lenders prior to making a decision as a private student loan is an expensive long term commitment.