Citibank's The Student Loan Corporation has recently changed the index on their CitiAssist private student loan for undergraduates from Prime Rate to 3-month LIBOR. The net result: significantly higher interest rates with minimum and maximum interest rates on their undergraduate loans increasing by around 200bp (or 2%). This information was gleaned from Citibank's website based on the A.P.R. examples that they provided.
Here is the comparison of interest rates (note that fees remained constant at 0 to 6%):
Previously: 4.25% to 10.75% (Prime + 1.00% to Prime + 7.50%)
Current LIBOR loan: 6.125% to 12.875% (3-month LIBOR + 4.75% to 11.50%)
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In terms of trends, this marks the third recent pricing change on a private student loan product:
- Discover increased interest rates on their private student loans by 150bp (1.5%) on the minimum interest rate and 300bp (3%) on their maximum rate which took effect on June 1st.
- Chase reduced their lowest rate on a cosigned private loan by 110bp (1.1%) in May while keeping their maximum interest rate unchanged.
If there is any silver lining, it is that the three-month LIBOR rates have declined and could be down 70-80bp (.7%-.8%) during their next measurement period for Citibank, which will come in mid-June.
Hello There, I just sign up for my last year and Citibank increased my CitiAssist Loan interest from 4.25% to 11.625%... Ripp off!!!!!!!!!
Posted by: Janaina | August 30, 2009 at 07:38 PM