Citibank Student Loans and The Student Loan Corporation

Citibank, through their student loan subsidiary called "The Student Loan Corporation" (www.studentloan.com), is one of the biggest student loan lenders in the nation. Actually, The Student Loan Corporation is now a separate company with Citibank as the major shareholder, but it amounts to the same thing. Their student lending program is enormously popular, and many universities (such as The University of Notre Dame, UC Irvine, Adelphi University and many others) have partnerships with Citibank through which they help their students get loans. In fact, The Student Loan Corporation currently serves approximately 1.7 million customers and over 3,000 schools nationwide.

I've been looking over The Student Loan Corporations products and the level of customer satisfaction among students who have borrowed from them, and they look pretty good. For one thing, they are innovative in finding new ways to help students finance their educations, and they work hard to improve the fairness of their lending program so that students will not default.

For example, most lenders reward students with an interest rate reduction to students who have made a certain number of consecutive payments on time. However, if the student makes a single late payment, many lenders will punish the student by eliminating the reduction and raising the interest rate, and then keeping it raised, no matter how faithfully the student makes his payments after that.

Citibank is bucking this trend by offering a benefit recovery feature that enables student borrowers to recover their low interest rate if they go back to making payments on time. What's more, this benefit recovery feature is unlimited, meaning even if you make a second or third late payment, you can still recover your low interest rate by making subsequent payments on time.

"It has been a standard practice among education lenders to completely eliminate any earned benefits if a borrower misses a regular payment or pays late," said Mark Kantrowitz, Publisher of FinAid.org - the largest student aid web site in the world. "I have long been outspoken about this issue as being unfair to borrowers -- now Citibank has done something about it. Citibank clearly understands the needs of students and parents."

Overall, Citibank seems to have a great student lending program. If you have already obtained your federal student loans and you're looking for a private lender, I recommend that you look into Citibank's Student Loan Corporation.