Citizens Financial in Providence, R.I., is continuing its push into consumer lending by offering loans to the parents of college students.
The new loan, announced Thursday, marks an expansion of Citizens' investment in education lending, an asset class it has targeted to improve returns as it spins off from its parent company, Royal Bank of Scotland. Citizens began refinancing federal and private student loans last year, and also offers private loan to students themselves.
With the latest offering, the $133 billion-asset Citizens becomes just the second bank, after Wells Fargo, to offer private loans to students' parents, it said. The federal government also offers parent loans.
The Citizens Bank Student Loan for Parents differs from the Wells Fargo and federal offerings, Citizens said. Citizens' fixed-rate loans have five- and ten-year terms, compared with ten for federal loans and fifteen for Wells Fargo's loans, and comes with no disbursement fee.
Citizens also guarantees a lower rate than the federal loan, and offers rate reductions for Citizens customers. The loans are available to anybody who wants to sponsor the education of an enrolled college student.
Citizens' student-loan portfolio was $2.3 billion at the end of last year, according to its annual report. The newly public company has pushed further into student, auto and other consumer loans to improve its return on equity.