Photo: / Contributed Photo
Christopher WolfePhoto: / Contributed Photo
In 2009, just as many banks were walking away from student lending and the federal government was planning to cut private banks’ role in its lending system, Citizens Bank entered the student loan business.
Since then, the bank has expanded its offerings from loans to refinancing substantially. Its student loan portfolio grew approximately 64 percent over the past year alone — to $5.5 billion as of June 30 from $3.3 billion a year before.
With tuition rising faster than inflation and about 42 million Americans now owing more than $1.3 trillion in student debt, Citizens has carved out a niche for itself.
Student debt report
LendEDU.com recently created a student debt report using Peterson’s financial aid data released earlier this month for the Class of 2015. Connecticut ranked first in the nation for average debt per borrower, at $36, 865. Here is the average debt for borrowers at area schools:
Yale University $15, 521
University of Bridgeport $21, 200
University of Connecticut $24, 999
Southern Connecticut State University$27, 617
Fairfield University $38, 780
Sacred Heart University $47, 715
Quinnipiac University $47, 873
He noted once students graduate and enter the workforce, they are able to build up credit that can help them get lower interest rates. A refinancing relationship can then lead to a future mortgage or other type of loan.
Coughlin said the average customer who chooses to refinance a loan with Citizens is 33 years old and has relatively strong credit. “If you were to draw up a customer we would love to have, that’s it, ” he said.
Citizens has the opportunity to find those refinancing customers in any state, especially in Connecticut. The state was recently ranked first in the nation by LendEdu.com for average debt per borrower, based on Class of 2015 financial aid data released by Peterson’s earlier this month; Connecticut students left school with an average of $36, 865 in debt.
Yale University reported the lowest average student debt per borrower of those universities in the state that provided data, at $15, 521. And the school had the lowest percentage of graduates with student debt at 17 percent.
Quinnipiac University came in with among the highest average student debt at $47, 873, with Sacred Heart University close behind at $47, 715 per borrower.
Nate Matherson, co-founder and CEO of LendEdu.com, said Connecticut’s ranking was affected by the number of private colleges in the state. “Private colleges are leaving students with more student loan debt at graduation than public colleges, ” he said. “I think our study shows student loans are as big a problem as ever.”
Wolfe said there was a shift in how banks saw student lending after federal legislation in 2010 that eliminated private banks’ roles in the federal government’s student lending system.
“With the changes in legislation, they were cut out of it, ” he said. “Some banks might have been very active in the federal program, but once that changed, they exited. Some banks have said, ‘Is it really worth it?’ What’s left for the private sector has been small.”