Survey: Majority of Student Loan Borrowers Don’t Know How Interest or Forgiveness Works

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As of 2018, the national student debt crisis has reached epic proportions; an estimated 44 million borrowers owe a collective $1.48 trillion in student loans.

But our latest survey of borrowers found misconceptions about student loans abound. More than one-half of our survey respondents, for instance, didn’t realize interest accrues on their federal unsubsidized loans while they’re in school.

And nearly 1 out of 10 borrowers are under the false impression that you don’t need to repay your loans if you can’t find a job after college.

These misunderstandings could delay your journey toward a debt-free life or even cause you to go into student loan default. Here are the biggest student loan myths our survey uncovered, followed by some tips on how to educate yourself about your student loans.

52% of borrowers think interest doesn’t accrue while they’re in school

One of the biggest factors that make student loans so hard to pay off is interest. Unless you have federal subsidized loans, your loans will accrue interest from the date they’re disbursed.

Unfortunately, 52% of student loan borrowers think you don’t need to worry about accruing interest on unsubsidized loans while you’re still in school.

“People assume that their balance won’t go up,” said Leslie Tayne, attorney and founder of Tayne Law Group, which specializes in consumer and business debt. “They don’t realize how fast interest adds up and that they could’ve been paying it while in school to offset it.”

Let’s say you borrow $9,500 in Direct Unsubsidized Loans at a 4.45% fixed interest rate for your first year of college.

If you don’t realize interest accrues, you might think you’ll owe that principal amount of $9,500 upon graduation. But over four years, your debt will have actually grown to $10,388 thanks to interest. If you take out additional loans throughout the years, you’ll owe a whole lot more after you earn your degree.

It’s important to understand how student loan interest works so you can prepare for repayment after college. As Tayne suggested, you might also start paying the interest while you’re in school to prevent your debt from growing unchecked.

Borrowers are confused about student loan interest in general

This survey revealed two other major misconceptions about how student loan interest works:

  • 47% of student loan borrowers think that if you put your federal loans into forbearance, they’ll stop accruing interest for a set amount of time.
  • 38% of student loan borrowers didn’t know that the interest rate on federal student loans is fixed.

Student loan forbearance lets you pause payments on your federal student loans if you run into economic hardship. But it doesn’t stop student loan interest from accruing.

Note that student loan deferment, unlike forbearance, usually stops interest from growing on subsidized federal loans. If you qualify, deferring your subsidized loans can offer better relief than forbearance.

Some private lenders, such as CommonBond, also offer deferment or forbearance for private student loans. But even if you pause payments, your balance will continue to grow due to accruing interest.

Federal loan interest rates, meanwhile, are fixed for both undergraduate and graduate students. Direct Loans have a fixed rate of 4.45% for undergrads and 6.00% for grad students. Even if the rates change for future borrowers, the rate you got when you took out the loan will be locked in.

Private student loans, on the other hand, typically let you choose between fixed and variable rates. Fixed rates stay the same over the life of the loan. Variable rates can fluctuate over time.

Whether you’re taking out student loans, preparing for repayment, or considering forbearance, it’s crucial to understand how student loan interest works so you can make the best choices for your finances.

53% of borrowers think student loan payments are automatically based on their income

Federal student loans are put on the Standard Repayment Plan, which offers fixed payments over a 10-year term. But 53% of student loan borrowers think that payments on the Standard Repayment Plan are based on how much you make.

This student loan myth is a dangerous one for borrowers. Knowing how much you’ll owe each month after graduation is an important way to plan ahead and stay current on your debt.

This myth could also be problematic for the 12% of borrowers who don’t realize the government can garnish your wages if you go into student loan default.

“People often think that they don’t have to pay student loans back,” said Tayne. “Failing to understand what it means to become delinquent on your student loan can hurt you financially. From possible wage garnishment to a negatively impacted credit score, struggling to pay your student loans can have major consequences.”

That being said, it’s possible to put your federal student loans on an income-driven repayment (IDR) plan. But you’ll have to apply separately for one. IDR plans include:

  • Income-Based Repayment
  • Income-Contingent Repayment
  • Pay As You Earn
  • Revised Pay As You Earn

These federal student loan repayment plans cap your monthly payments at a percentage of your income. Plus, they offer student loan forgiveness after 20 or 25 years of on-time repayment.

Borrowers can also look into the following student loan repayment plans if they need to adjust monthly dues:

  • Extended Repayment Plan: It lowers monthly payments by extending your term up to 25 years.
  • Graduated Repayment Plan: This plan offers smaller initial payments that increase over the course of 10 years.

Note that private student loans typically don’t come with all these student loan repayment options. You can usually choose student loan repayment terms between five and 15 years, but you likely won’t have access to IDR.

You’ll also lose access to IDR plans if you turn your federal student loans into a private one through student loan refinancing. You might snag a lower interest rate, but you’ll no longer have these repayment options to fall back on.

According to our survey, 40% of student loan borrowers didn’t know that you lose access to federal student loan repayment options when you refinance your debt with a private lender.

However, refinancing does give you the option to lower your payments. By choosing a longer payoff term, you’ll reduce your monthly dues. While this approach can help you gain control of your bills, it also means you’ll spend more on the loan over the long run.

For instance, let’s consider a loan of $30,000 with a 6.00% interest rate on a five-year, 10-year, and 15-year payment plan. As you can see, the longer plans give you smaller monthly payments but at greater long-term costs.

Repayment term Monthly payment Total interest Total cost of borrowing
5 years $580 $4,799 $34,799
10 years $333 $9,967 $39,967
15 years $253 $15,568 $45,568

If you’re refinancing one or more student loans for new terms, use a student loan calculator to compare your options. That way, you can strike the right balance between making your monthly payments more affordable and curbing the long-term costs of borrowing.

More than 7 out of 10 borrowers are misinformed about student loan forgiveness

Our survey also revealed that a disturbing amount of student loan borrowers (71%) believe that private student loans can be eligible for Public Service Loan Forgiveness (PSLF).

“A big misconception is people believe there’s a forgiveness program that they’ll qualify for,” said Tayne. She added that many people misunderstand the qualifications for student loan forgiveness. In truth, few borrowers ever qualify for it.

You can only earn forgiveness for federal student loans after working at an eligible nonprofit or other organization for 10 years. Borrowers that don’t understand these conditions could commit to a career that ultimately doesn’t help them pay off their private student loans fasters.

Since careers in public service don’t always pay well, you’re likely limiting your earning potential over time. Make sure you understand the terms of PSLF before making any big career moves for it.

And if you do have private student loans, consider other options for loan assistance. There are a number of student loan repayment assistance programs throughout the country that can help you pay off private student loans after a few years of qualifying work.

One-third of students aren’t sure how credit scores and cosigners come into play

Not only are borrowers confused about repayment, but they’re also unsure how the borrowing process works.

  • 34% of student loan borrowers think your credit score is the deciding factor when it comes to getting an undergraduate federal student loan.
  • 34% of student loan borrowers don’t know that most students will need a cosigner to get a private student loan.

In reality, qualifying for a federal student loan has nothing to do with your credit score. To be eligible for need-based or non-need-based loans, all you have to do is submit the Free Application for Federal Student Aid. The only exceptions to this rule are Grad PLUS and Parent PLUS Loans. These federal loans aren’t available to borrowers with an adverse credit history.

Private lenders, on the other hand, do consider your credit history before approving you for a loan. That’s why it’s no surprise that 94% of private student loans issued for the 2015-2016 school year had a cosigner, according to data firm MeasureOne.

However, both federal and private loans can drag down your credit if you miss payments or go into default.

Fortunately, most student loan borrowers (89%) understand that student loans can affect your credit score. The 11% of borrowers who don’t understand the credit impact of student loans should learn how debt repayment will affect their ability to take out other loans in the future.

Majority of borrowers only ‘somewhat confident’ about how student loans work

One of the biggest regrets among student loan borrowers is that they didn’t realize what they were getting into when they took out loans. It’s all too easy to take out student loans without having a clear understanding of how you’ll pay them back.

That uncertainty about your debt can follow you for years. This survey found that 9% of people with student loans are “not at all confident” in their knowledge of how student loans work. And 53% said they were only “somewhat confident.”

Whether you’re a new borrower or already dealing with a high balance, it’s crucial to educate yourself about student loans. Call your loan provider with any questions. Compare different student loan repayment plans to figure out which one is best for you.

You can also use student loan calculators to see exactly how interest adds up. If you’ve got a steady income and strong credit, you could also consider refinancing for lower rates or a shorter repayment term.

“The world of student loans can be murky and frustrating,” said Tayne. “The less you understand, the more likely you are to struggle paying them off. By making sense of your student loans, you can better manage your payments and maybe even pay them off sooner!”

Whatever approach you take, make sure you’ve done your research. By arming yourself with knowledge, you can win the fight against student debt.

Survey Methodology: This survey was conducted via SurveyMonkey from Jan. 25-26, 2018, with a nationally representative sample of 1,019 adults living in the United States. “Do you have student loans?” was used as a screening question, with a target answer of “yes.”

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Here are our top student loan lenders of 2018!
LenderVariable APREligibility 
1 Important Disclosures for CollegeAve.

CollegeAve Disclosures

College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.

  1. All rates shown include the auto-pay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.
  2. This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with an 8-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 7% variable Annual Percentage Rate (“APR”): 96 monthly payments of $179.28 while in the repayment period, for a total amount of payments of $17,211.20. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
  3. As certified by your school and less any other financial aid you might receive. Minimum $1,000. Information advertised as valid as of 07/1/2018. Variable interest rates may increase after consummation.

2 Important Disclosures for Discover.

Discover Disclosures

  1. At least a 3.0 GPA or equivalent qualifies for a one-time cash-reward of 1% of the loan amount of each new Discover student loan. Reward redemption period is limited. Please visit DiscoverStudentLoans.com/Reward for any applicable reward terms and conditions.
  2. View Terms and Conditions at DiscoverStudentLoans.com/AutoDebitReward.

3 Important Disclosures for Ascent.

Ascent Disclosures

Before taking out private student loans, you should explore and compare all financial aid alternatives, including grants, scholarships, and federal student loans and consider your future monthly payments and income. Applying with a cosigner may improve your chance of getting approved and could help you qualify for a lower interest rate. Ascent Student Loans may be funded by Richland State Bank (RSB) or Turnstile Capital Management, LLC (TCM), which are not affiliated entities. Certain restrictions and limitations may apply. Ascent Student Loan products are subject to credit qualification, completion of a loan application, verification of application information and certification of loan amount by a participating school. All loan products may not be available in certain jurisdictions. Other terms and conditions apply. Ascent is a federally registered trademark of TCM and may be used by RSB under limited license. Richland State Bank is a federally registered service mark of Richland State Bank.

  1. Competitive rates calculated monthly at the time of loan approval. (Rates are effective as of 8/01/2018 and include a 0.25% discount applied when a borrower in repayment elects automatic debit payments via their personal checking account.)
    Ascent Tuition: Variable rate loans are based on a margin between 2.00% and 11.00% plus the 1-Month London Interbank Offered Rate (LIBOR), rounded to the nearest 1/100th of a percent. The current LIBOR is 2.069%, which may adjust monthly. Your interest rate may increase or decrease, based on LIBOR monthly changes, resulting in an APR range between 3.82% – 12.82%. Fixed rate loans have an APR range between 5.54% and 14.59%.
    Ascent Independent: Variable rate loans are based on a margin between 4.00% and 12.50% plus the 1-Month London Interbank Offered Rate (LIBOR), rounded to the nearest 1/100th of a percent. The current LIBOR is 2.069%, which may adjust monthly. Your interest rate may increase or decrease, based on LIBOR monthly changes, resulting in an APR range between 5.49% and 12.77%. Fixed rate loans have an APR range between 7.06% and 13.72%.
  2. Payments may be deferred. Subject to lender discretion, forbearance and/or deferment options may be available for borrowers who are encountering financial distress.
  3. Making interest only or partial interest payments while in school will not reduce the principal balance of the loan. There are three (3) flexible in-school repayment options that include fully deferred, interest only and $25 minimum repayment. Click here for a Tuition repayment example.
  4. Flexible repayment plans may be offered with up to a fifteen (15) year repayment term for a variable rate loan and ten (10) year repayment term for a fixed rate loan. Students must be enrolled at least half-time at an eligible school. Minimum loan amount of $2,000. Ascent borrowers who choose a fixed rate option may ONLY select a loan term of five (5) or twelve (12) years (60 or 144 months, respectively). For certain loans with low balances the minimum monthly payment amount may cause the loan amortization schedule to be less than the selected term. Click here for Ascent Tuition cosigned loan current rates and repayment examples.
  5. Interest rate reduction of 0.25% for enrollment in automatic debit applies only when the borrower and/or cosigner signs up for automatic payments and the regularly scheduled, current amount due (including full, flat, or interest only payments, as applicable) is successfully deducted from the designated bank account each month. Interest rate reduction(s) will not apply during periods when no payment is due, including periods of In-School, Deferment, Grace or Forbearance. If you have two (2) returned payments for Nonsufficient Funds, we may cancel your automatic debit enrollment and you will lose the 0.25% interest rate reduction. You will then need to re-qualify and re-enroll in automatic debit payments in order to receive the 0.25% interest rate reduction.
  6. All applicants (individual and cosigner) are required to complete a brief online financial literacy course as part of the application process to be eligible for funding.
  7. Eligibility, loan amount and other loan terms are dependent on a number of factors, including: loan product, other financial aid, creditworthiness, school, program, graduation date, major, cost of attendance and other factors. Aggregate loan limits may apply. The cost of attendance is determined and certified by the educational institution.
  8. The legal age for entering into contracts is eighteen (18) years of age in every state except Alabama where it is nineteen (19) years old, Nebraska where it is nineteen (19) years old (only for wards of the state), and Mississippi and Puerto Rico where it is twenty-one (21) years old.
  9. 1% Cash Back Graduation Reward subject to terms and conditions, click here for details.
  10. Students can apply to release their cosigner and continue with the loan in only their name after making the first 24 consecutive regularly scheduled full principal and interest payments on-time and meeting the other eligibility criteria to qualify for the loan without a cosigner.

* Application times vary depending on the applicants ability to supply the necessary information for submission.


* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.
4 = Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.

5 Important Disclosures for PNC.

PNC Disclosures

  1. Interest will continue to accrue during periods of deferment. You will receive quarterly interest statements during this deferment period. Paying the interest as it accrues each quarter will save you money over the repayment term of the loan because any accrued interest that you do not pay will be added to the principal balance at the end of the deferment period.
  2. If automatic payment is discontinued, you will no longer receive an automatic payment discount. A federal regulation limits the number of transfers that may be made from a savings or money market account. Please contact your financial institution for more information on transfer limitations on savings accounts.
  3. A request to release a co-signer requires that you have made forty-eight (48) consecutive timely payments with no periods of forbearance or deferment within the forty-eight (48) month timeframe. “Timely payment” means each payment is made no later than the 15th day after the scheduled due date of the payment. “Consecutive payment” means the minimum monthly payment must be made for forty-eight (48) months straight without any interruption. To qualify for a co-signer release, the borrower must submit a request, meet the consecutive, timely payment requirements, provide proof of income and pass a credit check.

PNC Bank is one of the nation’s largest education loan providers. For over 40 years, PNC has been committed to helping students and their families make possible the adventure of college.


6 Important Disclosures for SunTrust.

SunTrust Disclosures

Before applying for a private student loan, SunTrust recommends comparing all financial aid alternatives including grants, scholarships, and both federal and private student loans. To view and compare the available features of SunTrust private student loans, visit https://www.suntrust.com/loans/student-loans/private.

Certain restrictions and limitations may apply. SunTrust Bank reserves the right to change or discontinue this loan program without notice. Availability of all loan programs is subject to approval under the SunTrust credit policy and other criteria and may not be available in certain jurisdictions.

SunTrust Bank, Member FDIC. ©2018 SunTrust Banks, Inc. SUNTRUST, the SunTrust logo and Custom Choice Loan are trademarks of SunTrust Banks, Inc. All rights reserved.

  1. Interest rates and APRs (Annual Percentage Rates) depend upon (a) the student’s and cosigner’s (if applicable) credit histories, (b) the repayment option and repayment term selected, (c) the requested loan amount and (4) other information provided on the online loan application. If approved, applicants will be notified of the rate applicable to your loan. Rates and terms effective for applications received on or after 8/01/2018. The current variable APRs for the program range from 3.876% APR to 12.875% APR and the current fixed APRs for the program range from 5.351% APR to 14.051% APR (the low APRs within these ranges assume a 7-year $10,000 loan, with two disbursements and no deferment; the high APRs within these ranges assume a 15-year $10,000 loan with two disbursements). The variable interest rate for each calendar month is calculated by adding the current One-month LIBOR index to your margin. LIBOR stands for London Interbank Offered Rate. The One-month LIBOR is published in the Money Rates section of The Wall Street Journal (Eastern Edition). The One-month LIBOR index is captured on the 25th day of the immediately preceding calendar month (or if the 25th is not a business day, the next business day thereafter), and is rounded up to the nearest 1/8th of one percent. The current One-month LIBOR index is 2.125% on 8/01/2018. The variable interest rate will increase or decrease if the One-month LIBOR index changes. The fixed rate assigned to a loan will never change except as required by law or if you request and qualify for the auto pay discount.
  2. Any applicant who applies for a loan the month of, the month prior to, or the month after the student’s graduation date, as stated on the application or certified by the school, will only be offered the Immediate Repayment option. The student must be enrolled at least half-time to be eligible for the partial interest, fully deferred and interest only repayment options unless the loan is being used for a past due balance and the student is out of school. With the Full Deferment option, payments may be deferred while the student is enrolled at least half-time at an approved school and during the six month grace period after graduation or dropping below half-time status, but the total initial deferment period, including the grace period, may not exceed 66 months from the first disbursement date. The Partial Interest Repayment option (paying $25 per month during in-school deferment) is only available on loans of $5,000 or more. For payment examples, see footnote 7. With the Immediate Repayment option, the first payment of principal and interest will be due approximately 30-60 calendar days after the final disbursement date and the minimum monthly payment is $50.00. There are no prepayment penalties.
  3. The 15-year term and Partial Interest Repayment option (paying $25 per month during in-school deferment) are only available for loan amounts of $5,000 or more. Making interest only or partial interest payments while in school deferment (including the grace period) will not reduce the principal balance of the loan. Payment examples within this footnote assume a 45-month deferment period, a six-month grace period before entering repayment and the Partial Interest Repayment option. 7 year term: $10,000 loan disbursed over two transactions with a 7 year repayment term (84 months) and a 8.468% APR would result in a monthly principal and interest payment of $199.90. 10 year term: $10,000 loan disbursed over two transactions with a 10-year repayment term (120 months) and an 8.938% APR would result in a monthly principal and interest payment of $162.92. 15 year term: $10,000 loan disbursed over two transactions with a 15-year repayment term (180 months) and a 9.423% APR would result in a monthly principal and interest payment of $136.90.
  4. The 2% principal reduction is based on the total dollar amount of all disbursements made, excluding any amounts that are reduced, cancelled, or returned. To receive this principal reduction, it must be requested from the servicer, the student borrower must have earned a bachelor’s degree or higher and proof of such graduation (e.g. copy of diploma, final transcript or letter on school letterhead) must be provided to the servicer. This reward is available once during the life of the loan, regardless of whether the student receives more than one degree.
  5. Earn an interest rate reduction for making automatic payments of principal and interest from a bank account (“auto pay discount”). Earn a 0.25% interest rate reduction when you auto pay from any bank account and an extra 0.25% interest rate reduction when you auto pay from a SunTrust Bank checking, savings, or money market account. The auto pay discount will continue until (1) automatic deduction of payments is stopped (including during any deferment or forbearance) or (2) three automatic deductions are returned for insufficient funds during the life of the loan. The extra 0.25% interest rate reduction when you auto pay from a SunTrust Bank account will be applied after the first automatic payment is successfully deducted and will be removed for the reasons stated above. In the event the auto pay discount is removed, the loan will accrue interest at the rate stated in your Credit Agreement. The auto pay discount is not available when payments are deferred or when the loan is in forbearance, even if payments are being made.
  6. A cosigner may be released from the loan upon request to the servicer provided that the student borrower is a U.S. citizen or permanent resident alien, has met credit criteria and met either one of the following payment conditions: (a) the first 36 consecutive monthly principal and interest payments have been made on-time (received by the servicer within 10 calendar days after their due date) or (b) the loan has not had any late payments and has been prepaid prior to the end of the first 36 months of scheduled principal and interest payments in an amount equal to the first 36 months of scheduled principal and interest payments (based on the monthly payment amount in effect when you make the most recent payment). As an example, if you have made 30 months of consecutive on-time payments, and then, based on the monthly payment amount in effect on the due date of your 31st consecutive monthly payment, you pay a lump sum equal to 6 months of payments, you will have satisfied the payment condition. Cosigner release may not be available if a loan is in forbearance.
  7. If the student dies after any part of the loan has been disbursed, and the loan has not been charged off due to non-payment or bankruptcy, then the outstanding balance will be forgiven if the servicer is informed of the student’s death and receives acceptable proof of death. If the student becomes totally and permanently disabled after any part of the loan has been disbursed and the loan has not been charged off due to non-payment or bankruptcy, the loan will be forgiven upon the servicer’s receipt and approval of a completed discharge application. If the student borrower dies or becomes totally and permanently disabled prior to the full disbursement of the loan, and the loan is forgiven, all future disbursements will be cancelled. Loan forgiveness for student death or disability is available at any point throughout the life of the loan.

7 Important Disclosures for LendKey.

LendKey Disclosures

Additional terms and conditions apply. For more details see LendKey


8 Important Disclosures for CommonBond.

CommonBond Disclosures

A government loan is made according to rules set by the U.S. Department of Education. Government loans have fixed interest rates, meaning that the interest rate on a government loan will never go up or down.

Government loans also permit borrowers in financial trouble to use certain options, such as income-based repayment, which may help some borrowers. Depending on the type of loan that you have, the government may discharge your loan if you die or become permanently disabled.

Depending on what type of government loan that you have, you may be eligible for loan forgiveness in exchange for performing certain types of public service. If you are an active-duty service member and you obtained your government loan before you were called to active duty, you are entitled to interest rate and repayment benefits for your loan.
If you are unable to pay your government loan, the government can refer your loan to a collection agency or sue you for the unpaid amount. In addition, the government has special powers to collect the loan, such as taking your tax refund and applying it to your loan balance.

A private student loan is not a government loan and is not regulated by the Department of Education. A private student loan is instead regulated like other consumer loans under both state and federal law and by the terms of the promissory note with your lender.
If you refinance your government loan, your new lender will use the proceeds of your new loan to pay off your government loan. Private student loan lenders do not have to honor any of the benefits that apply to government loans. Because your government loan will be gone after refinancing, you will lose any benefits that apply to that loan. If you are an active-duty service member, your new loan will not be eligible for service member benefits. Most importantly, once you refinance your government loan, you will not able to reinstate your government loan if you become dissatisfied with the terms of your private student loan.

If your private student loan has a fixed interest rate, then that rate will never go up or down. If your private student loan has a variable interest rate, then that rate will vary depending on an index rate disclosed in your application. If the interest rate on the new private student loan is less than the interest rate on your government loans, your payments will be less if you refinance.
If you are a borrower with a secure job, emergency savings, strong credit and are unlikely to need any of the options available to distressed borrowers of government loans, a refinance of your government loans into a private student loan may be attractive to you. You should consider the costs and benefits of refinancing carefully before you refinance.

If you don’t pay a private student loan as agreed, the lender can refer your loan to a collection agency or sue you for the unpaid amount.

Remember also that like government loans, most private loans cannot be discharged if you file bankruptcy unless you can demonstrate that repayment of the loan would cause you an undue hardship. In most bankruptcy courts, proving undue hardship is very difficult for most borrowers.


9 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. Student Loan Rate DisclosureVariable rate, based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of August 1, 2018, the one-month LIBOR rate is 2.07%. Variable interest rates range from 4.04%-12.01% (4.04%-11.91% APR) and will fluctuate over the term of the loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a cosigner. Fixed interest rates range from 5.25%-12.19% (5.25% – 12.09% APR) based on applicable terms, level of degree earned and presence of a cosigner. Lowest rates shown requires application with a cosigner, are for eligible applicants, require a 5-year repayment term, borrower making scheduled payments while in school and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. Please note: Due to federal regulations, Citizens Bank is required to provide every potential borrower with disclosure information before they apply for a private student loan. The borrower will be presented with an Application Disclosure and an Approval Disclosure within the application process before they accept the terms and conditions of the loan.
  2. Multi-year approval funds available for future use are subject to a soft credit inquiry at time of your next request to verify continued eligibility. After we make the initial Loan to you, we may refuse to allow you to take out additional loans under the multi-year approval feature, terms and conditions will be outlined in your promissory note. Please Note: International students are not eligible to receive an offer for multi-year approval. Please Note: International Students are not eligible for the multi-year approval feature.
  3. Loyalty Discount Disclosure: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower or their co-signer (if applicable) has a qualifying account in existence with us at the time the borrower and their co-signer (if applicable) have submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: 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, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI, and VT and some products may have an associated cost. This discount will be reflected in the interest rate disclosed in the Loan Approval Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  4. Automatic Payment Discount Disclosure: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount.
  5. Co-signer Release: Borrowers may apply for co-signer release after making 36 consecutive on-time payments of principal and interest. For the purpose of the application for co-signer release, on-time payments are defined as payments received within 15 days of the due date. Interest only payments do not qualify. The borrower must meet certain credit and eligibility guidelines when applying for the co-signer release. Borrowers must complete an application for release and provide income verification documents as part of the review. Borrowers who use deferment or forbearance will need to make 36 consecutive on-time payments after reentering repayment to qualify for release. The borrower applying for co-signer release must be a U.S. citizen or permanent resident. If an application for co-signer release is denied, the borrower may not reapply for co-signer release until at least one year from the date the application for co-signer release was received. Terms and conditions apply.
3.69%
10.94%
1
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3.72%
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4.04%
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Undergraduate, Graduate, and ParentsVisit Citizens
Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.