Citizens Bank Student Loan Refinance: Requirements, Benefits, and Considerations

Refinancing your student loans can be a strategic move to potentially lower your monthly payments, secure a more favorable interest rate, or simplify your finances by consolidating multiple loans into one. Citizens Bank is one of the lenders that offers student loan refinancing, and this article will provide a comprehensive overview of their requirements, benefits, and important considerations to help you make an informed decision.

Who Can Benefit from Refinancing with Citizens Bank?

Refinancing with Citizens Bank may be particularly beneficial for:

Borrowers with a high debt balance: Refinancing can help manage and potentially reduce the overall cost of a substantial student loan debt.
Existing Citizens Bank customers: Citizens Bank offers additional benefits, such as interest rate reductions, to customers who already have accounts with them.

Citizens Bank Refinance Offerings

Citizens Bank provides refinancing options for both student loans and Parent PLUS loans, with both fixed and variable interest rates available.

Interest Rates: Variable rates are subject to change and are often based on benchmarks like the 30-Day SOFR rate (4.27% as of this writing), published by the Federal Reserve Bank of New York. Keep in mind that variable rates can fluctuate with market conditions.
Rate Checks: Checking your potential interest rate with Citizens Bank will not affect your credit score, as they typically use a "soft" credit pull for initial rate quotes. However, a full credit check is required when you formally apply.

Eligibility and Requirements

While Citizens Bank does not explicitly disclose a minimum credit score, a solid credit history and good credit score are generally required to meet eligibility requirements. Some factors that Citizens Bank will review:

Payment history: Lenders will want to see a history of on-time payments to prior lenders.

One notable advantage of Citizens Bank is that it makes refinancing student loans accessible to those without bachelor’s degrees. As long as you have made 12 qualifying loan payments on your student loans since leaving school, you are eligible to refinance with Citizens Bank even if you have an associate’s degree or no degree at all.

Read also: Is Citizens Bank Right for You?

Loan Terms and Amounts

Loan Amounts: The minimum refinancing loan amount is $10,000, which is higher than some other lenders. Borrowing loan limit is $300,000 for Bachelor’s degrees and below and $500,000 for Graduate degrees.
Loan Terms: Citizens Bank offers a variety of loan terms, including 5, 7, 10, 15, and 20-year options, giving you flexibility in choosing a repayment schedule that fits your budget.

Fees and Discounts

Fees: Be aware of potential fees, such as late payment fees, which Citizens Bank charges when a payment is 15 days late (5% of the overdue amount).
Discounts:
- Citizens Bank offers a 0.25% interest rate reduction for enrolling in automatic payments.
- An additional 0.25% reduction is available for linking a Citizens Bank account to autopay.
- Citizens occasionally partners with other companies for promotional offers. For example, one current promotion offers employees a $500 gift card when they refinance over $40,000 in student loans.
- Citizens Bank makes different arrangements among its partner organizations.

Benefits of Refinancing

Lower Interest Rates: Refinancing can potentially lower your interest rate, saving you money over the life of the loan. For example, if you have $25,000 in private student loans at 7% interest with a 10-year repayment period, refinancing to a 4% interest rate could lower your monthly payment by $37.
Consolidation: Refinancing allows you to combine multiple loans into a single loan with one monthly payment, simplifying your finances.
Converting Variable-Rate Loans to Fixed Rate: Refinancing can allow you to switch from a variable interest rate to a fixed interest rate, providing more predictability in your monthly payments.
Faster Repayment Options: Refinancing can allow for a shorter loan term, helping you pay off your loans faster.
Opportunity to Remove a Cosigner: Refinancing can allow you to release a cosigner from your loan, provided you meet the lender's eligibility requirements. To release a cosigner, you must make 36 consecutive on-time monthly payments.

Potential Drawbacks

Loss of Federal Loan Benefits: Refinancing federal student loans with a private lender like Citizens Bank means you'll lose access to federal benefits such as income-driven repayment plans and loan forgiveness programs.
Forbearance Limitations: You may qualify to put your loans into forbearance for a maximum of 12 months in a row in 2-month periods.
Late Fees: Citizens Bank does charge late fees, which can add to the overall cost of the loan.
Cosigner Release Period: The cosigner release period can be lengthy, requiring 36 on-time payments.
Minimum Borrowing Requirement: The minimum refinancing loan amount is $10,000, which may not be suitable for borrowers with smaller loan balances.

Citizens Bank and the CFPB

As a consumer finance company, Citizens Bank is under the jurisdiction of the Consumer Financial Protection Bureau (CFPB). The CFPB allows consumers to file official complaints. In 2024, consumers filed 1,869 complaints about Citizens Bank, up 68.0% compared to an average year. The allegations made in these complaints are unverified, are not necessarily representative of all consumers’ experiences with Citizens Bank, and may contain outdated information (about rates, bonus offers, etc.).Examples of complaints include:

Payments being reversed, leading to late fees and credit score damage.
Disputes over debt ownership and collection practices.
Issues with quoted interest rates and discounts not being applied.

Citizens Bank is currently subject to at least three lawsuits: two civil actions and one class action.

Equal Employment Opportunity Commission v. Citizens Bank, N.A., Case No. The United States Equal Employment Opportunity Commission (EEOC) filed a civil action against Citizens Bank.
Bureau of Consumer Financial Protection v. Citizens Bank, N.A., Case No. The United States Bureau of Consumer Financial Protection or the Consumer Financial Protection Bureau (CFPB) filed a civil action against Citizens Bank on January 30, 2020.
Davis v. William Davis brought a class action complaint against Citizens on January 11, 2021.

Alternatives to Citizens Bank

It's wise to compare offers from multiple lenders before making a decision. Citizens partners with Credible as part of its multilender lender marketplace.

Refinancing Private vs. Federal Loans

When it comes to refinancing private loans, it could be worth exploring. However, refinancing federal loans with a private lender could result in forfeiting some of the benefits available with federal loans.

Customer Reviews and Experiences

Customer reviews can offer valuable insights into the experiences of other borrowers with Citizens Bank. Below are samples of Citizens Bank customer reviews found on public forums:

"If you are still paying down your student loans, consider refinancing them now. [Another lender] was offering a competitive rate, so I called Citizens Bank and they were able to beat [the other lender]’s rate."
"I refinanced with [Citizens Bank] in December of 2016. Interest rate great. I will say, however, I had issues with them paying off my Perkins/ECSI and Mohela loans. There was a 30 day delay. They had to stop payment on the original checks and resubmit."
"Citizen’s is a good company - I just refinanced my 2nd private student loan with them, because I could finally get an interest rate lower than the rate on that loan."

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