DETROIT — Charter One and parent company Citizens Financial Group has introduced a new way for student loan borrowers to manage the long-term cost of college — the ability to refinance federal student loans via its Education Refinance Loan, which Citizens launched earlier this year with an initial focus on private student loans.
To date, the Citizens’ Education Refinance Loan has helped private student loan borrowers lower their monthly payments by an average of $127 and lower their average APR by 1.5 percent, saving thousands of dollars in interest payments over the lives of their loans. Others have utilized refinancing to set consistent monthly payments for the duration of their private student loan by switching to a fixed rate. With today’s announcement, qualified borrowers can now use the Education Refinance Loan to consolidate federal student loans in addition to private student loans, significantly broadening the appeal of this product.
Federal student loans represent 92 percent of student loan debt in the United States, according to industry estimates. In addition, a recent report stated that 40 million consumers now hold at least one student loan with the average consumer holding 3.7 open student loans.
Citizens research published in August showed that many consumers — both students and their parents — now see the cost of college threatening their future home purchase and retirement plans.
“While a college education is one of the best investments a young adult can make, paying for it afterward while trying to achieve other financial milestones can be difficult,” says Brendan Coughlin, president of Education Finance for Citizens. “Loans that are affordable when students are 18 years old often are not the best solutions for them five or more years later, when they have built a strong credit history.”
Coughlin says depending on borrowers’ individual needs, the Education Refinance Loan offers potential benefits like a lower monthly payment, lower interest rate, lower overall cost of their loan, locking a variable rate into a fixed rate or a single monthly student loan payment. The loan offers eligible applicants interest rates as low as 2.31 percent for variable rates and 4.74 percent for fixed rates, with eligible discounts applied. There are no application, origination or disbursement fees, no prepayment penalties and refinancing.
Detailed information on qualifications required for the loan is available on the Citizens Bank website and the Charter One website.