If you read the previous article, you may have noticed that I bagged on brick and mortar student lending institutions. But hey, I had good reason. The fact is, most of these brick and mortar places really can’t compare to the newer, online lenders.
All that aside, I don’t want you to think that all banks are bad. The fact is, you can still get a good deal, and lots of nice perks, assuming you pick the right ones. So, today we’re going to look at two of the best brick and mortar lenders out there: Citizen’s Bank and Darien Rowayton Bank. (I’ll just refer to it as DRB for the rest of the article, just so I don’t have to type that name any more.)
Citizen’s Bank in a nutshell
Citizen’s bank is a dinosaur. It’s been around since 1828, when it was nothing more than a small bank in Providence, Rhode Island (thanks Wikipedia!). Since then it’s moved around a bit, taken on several different ownership groups, and now is currently owned by the Royal Bank of Scotland.
That’s right, one of the oldest and biggest banks in the United States is owned by a Scottish company.
Citizen’s bank was ranked the 13th largest bank in the U.S. back in 2015, and it doesn’t appear to be going away any time soon.
Like most banks out there, Citizen’s bank is very, very conservative. They take lending very seriously. They don’t look at future earning potential, or job prospects. All of their lending decisions are based on a borrower’s current ability to pay.
Fortunately, or unfortunately, that means most graduates are going to need a cosigner to qualify for a loan. Don’t believe me? Forbes did a little research and found out that a whopping 95% of the student loans with Citizen’s bank are done with a cosigner.
The bank goes out of its way to encourage potential borrowers to get cosigners. But hey, it’s a strategy that’s worked great for them so far. Currently, their default rate is at 1%. That’s pretty good number if you ask me.
What about DRB?
DRB is a much younger company, having only been around since 2006. While relatively new to the banking world, they have been making waves. While DRB doesn’t have the history that Citizen’s Bank has, they are still a big deal.
DRB currently holds a world record.
Apparently, DRB is the fast bank in history to reach the billion dollar mark in student refinancings. Wahoo … the point is, that’s a bunch of money.
DRB has taken a slightly different approach to student loans than Citizen’s Bank. They operate much more similarly to companies like Earnest and SoFi, than with regular brick and mortar banks.
You see, unlike these dinosaurs like Citizen’s Bank, they aren’t tied down to super conservative measures. Like the new wave of tech companies taking over the student loan landscape, DRB is much more flexible in its lending, and is able to offer a lot of perks you might not get elsewhere.
So, how are they different?
Citizen’s Bank is pretty run of the mill when it comes to student loans. But, you need to look at “run of the mill” in the proper context. When I say “run of the mill, ” I mean it’s a pretty normal TOP 10 student loan institution. That means it’s way better than just about every lender out there. However, when you get to the top 10, there is a reason those lenders are rated so high. They do things right by their borrowers and shareholders.
Anyway, Citizen’s bank offers the regular competitive interest rates and loan terms. They also have a deferment program that last 6 months. They even offer borrowers the opportunity to make interest only payments while in school.
However, like I said a little bit ago, their biggest difference is the HUGE emphasis they put on getting a cosigner. This definitely has its perks. If you decide to go with Citizen’s Bank, you know what you’re going to get. You are going to have a cosigner all lined up, and you’re probably going to get a better interest rate because of it.
Look the reality is that many lender are going to require you to get a cosigner anyways. Borrowing with Citizen’s Bank just helps you get the process of finding an adequate cosigner and getting them on board, instead of scrambling to find one at the last minute.
DRB, on the other hand, really sets itself apart from the competition with its perks. I’ll start with the worst case scenario perks, and work my way backwards.
First, DRB offers a loan forgiveness program. Granted, you’re probably not going to try and qualify for this loan forgiveness program. DRB is the only private student lender I’ve seen that actually has one. Here’s the catch, though. In order to get your loans forgiven, you need to either die, or become permanently disabled to the point that your income is seriously lowered. Nice, right? I know I’d sleep good at night knowing my $300, 000 in student loans will be forgiven if something happens to me. That’s better than a life insurance policy … maybe.
The next thing DRB has is a 12 months of forbearance over the life of the loan, just in case you hit hard times.
They also have a neat “spousal consolidation” program that allows spouses with student loans to combine their loans together into a single loan.