Citizens Bank Education Loan Refinance Review

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Updated on Wednesday, April 15, 2015

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Citizens Bank offers student loan refinancing for both private and federal loans through its Education Refinance Loan.

Since Citizens Bankis a traditional bank, its loan process is very thorough. You’ll have to fill out the application and supply the requested documentation before hearing back. Citizen’s Bank does have a rate quote tool they call “Get My Rate“, that uses a soft credit pull to show users what rate they would qualify for without affecting their credit.

Let’s take a look at what Citizens Bank can offer if you’re looking to refinance your student loans.

Refinance Terms Offered

With Citizens Bank,you need a minimum of $10,000 in student loans to refinance. The max amount you can refinance is $90,000 if you have a Bachelor’s Degree or below, up to $225,000 if you have a graduate/doctoral degree (MBA included), up to $300,000 if you have a law degree, or up to $350,000 if you have a professional degree (law, medical, dental).

The range on its fixed rate loans is 2.99% – 8.49% APR, and the range on its variable interest rate loans is 1.99% – 8.24% APR.

You can refinance on a 5, 10, 15, or 20 year term.

You can also receive up to 0.50% in interest rate deductions. 0.25% comes from enrolling in automatic payments (meaning your monthly payment is automatically deducted from your checking account). The other 0.25% comes from already having an account with Citizens Bank (its “loyalty” discount).

An example payment would look like this: $10,000 balance at a 5.44% fixed rate on a 20 year term = $68 per month (that’s with excellent credit).

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The Pros and Cons

Citizens Bank offers low rates and the option of having a fixed rate or variable rate loan. It offers a wide variety of terms (fixed and variable rates, and 5, 10, 15, and 20 year terms), and it has a forbearance option for those face financial hardship and have difficulty paying back the loan.

There aren’t too many downsides to refinancing with Citizens Bank aside from the more involved application process, and the hard credit inquiry.

One con to note is its 0.25% loyalty interest rate deduction won’t be available to everyone. According to the Citizens Bank Loyalty Discount Disclosure, the following accounts would qualify: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, or other student loans owned by Citizens Bank. Its checking and savings accounts are only available in Connecticut, Delaware, Maine, Michigan, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, and Vermont. If you don’t live in those states, you’re out of luck (but can still get the 0.25% auto-payment discount).

If you graduated with a Bachelors degree but have six-figures of student loan debt, refinancing with Citizens Bank might not be the best option, due to its maximum loan cap. There are other lenders out there with a larger maximum loan limit.

[Find out what happens when you refinance a Federal student loan.]

What You Need to Qualify

To be eligible to refinance your student loans with Citizens Bank, you must meet the following requirements:

  • You can’t be currently enrolled in school
  • You should have a history of paying your current student loans back on time
  • It’s not necessary to have graduated, but if you didn’t obtain a degree, then you must make 12 full on-time payments of principal and interest before you’re eligible to refinance
  • If you have a Bachelors degree, then you only need to make 3 full on-time payments of principal and interest before being eligible to refinance
  • You may be able to refinance even if you’ve previously consolidated your student loans
  • Primary borrowers must be a U.S. citizen, permanent resident or resident alien with a valid U.S. Social Security Number residing in the United States. Resident aliens must apply with a co-signer who is a U.S. citizen or permanent resident. The co-signer (if applicable) must be a U.S. citizen or permanent resident with a valid U.S. Social Security Number residing in the United States.
  • As for credit, Citizens Bank states, “You’ll need to present a reasonably strong credit history, which is derived from your credit score”
  • You need a minimum household income of $24,000

If you’re worried about the income and credit qualifications, you can elect to have a cosigner on your loan. Cosigners are released after 36 consecutive payments on the loan.

Documents and Information Needed to Apply

Citizens Bank recommends you have the following documents on hand during the application process:

  • Existing student loan information (you’ll need recent billing statements for the loans you want to refinance)
  • Employment information (employer, gross monthly income, phone number, length of employment)
  • Social Security Number or birth certificate
  • Two most recent pay stubs
  • Receipt of monthly housing payments, if applicable

If you’re self-employed or earn any income on the side, additional documentation such as previous tax returns may be required. Citizens Bank has a list of other documents you might want to have on its FAQ.

Who Benefits the Most from Refinancing Student Loans with Citizens Bank?

The most common reason to refinance student loans is to get a better interest rate, and to simplify how many payments you’re sending out a month. If your interest rates are on the higher side (above 7%), or if you’re making payments to several different lenders, refinancing could be beneficial.

When it comes to refinancing with Citizens Bank, borrowers (or cosigners) who have a strong credit history and score are most likely to be approved.

With a good credit score, you may be able to refinance to lower interest rates. If you would like to have a fixed rate instead of a variable rate, you can refinance for that reason, too.

If you have federal student loans you’re refinancing, be aware that certain benefits are no longer available once you refinance them into private loans. For example, you won’t have access to the variety of repayment options that comes with federal loans.

Citizens Bank does at least offer a forbearance option for those facing financial hardship.

[Click here to read more about student loan forgiveness programs.]

Fees and Gotchas

When you refinance with Citizens Bank, there are no hidden fees. You won’t have to worry about an application, origination, or disbursement fee, and there’s no prepayment penalty, either.

The only fee you might incur is a late fee, which is 5% of your monthly payment amount. This is standard for most loans.

Transparency Score

Citizens Bank receives an A+ transparency score from MagnifyMoney because it offers both a co-signer option and a co-signer release. However, its late fee wasn’t explicitly stated on their website, unlike other lenders.

Alternative Student Loan Refinancing Lenders

There are many lenders offering student loan refinancing solutions. If you don’t qualify with Citizens Bank, you might qualify with another lender.

If you have a good credit score, but have a larger amount you want to refinance than Citizens Bank will allow, look into SoFi. It doesn’t have a maximum loan amount, and it has lower fixed and variable interest rates.

SoFi* also has the same options for loan terms (5, 10, 15, and 20 years). Your credit score should be at least 700 or higher and co-signers are accepted on a case-by-case basis. However, SoFi does a soft credit inquiry to start, so applying with it first is recommended.

LendKey* may also be a good option, although it only offers fixed interest rates in select states. The maximum amount for borrowers with an undergraduate degree is $125,000, and $250,000 for those with a graduate degree.

Its loan term is only up to 20 years, though the shorter the term, the less you’ll pay in interest over the life of your loan. It also allows cosigners in case your credit needs a bit of work and also offers a cosigner release. Its loans are offered exclusively through credit unions and community banks.

SoFi and LendKey also offer forbearance options and will work with borrowers in the event they face a financial hardship. Remember, you’re giving up payment flexibility when refinancing federal loans privately, so this is important to consider.

Don’t Be Afraid to Shop Around

You always want to get the best rates on your loans, especially if you’re refinancing to lower the amount of interest you’re paying. It’s wise to first apply with lenders who only conduct a soft credit inquiry to get an idea of your rate options.

If you’re not satisfied with your results, continue to shop around with lenders who conduct a hard credit inquiry. As long as you do so within a 30-day period, your credit score won’t be affected as much, as all the inquiries made will count only once.

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