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October 20, 2008

"Citi Loan Program Ends Nationwide"

While the total cancellation of the CitiAssist program is certainly not unexpected, The Harvard Crimson is reporting that the entire program has been halted for all new loans:

Graduate students at Harvard are not alone in facing rising interest rates on their student loans after Citigroup, the struggling financial services giant, cancelled a program designed to make it easier for international students to receive loans.

Citibank, the consumer and corporate banking arm of Citigroup, terminated its custom loan program with international graduate students at Harvard earlier this month, according to University officials. The bank is also canceling similar agreements with international students at schools including MIT and the University of Michigan, financial aid officers at those schools said.

The Assist custom loan program allowed foreign students to take out student loans without a cosigner—something that most lenders require of all students.

Citibank will honor all CitiAssist loans that were processed before the programs’ termination and will continue to underwrite loans for students in coming years, but no longer under the terms of the special arrangements with the affected schools.

Citigroup spokesman Mark Rodgers declined to say how many schools will be affected by the change, calling the specific arrangements with institutions confidential.

Harvard, MIT, and University of Michigan have already announced terminations. One would hope all institutions will do so as soon as possible as applicants potentially effected by this change in policy should have a clear idea of what funding sources will be available to them. Applicants who are counting on students loans to fund their graduate studies deserve to know whether it is even worth applying to effected schools. Given the complexity of finding new funding sources in today's investment climate, I am particularly pessimistic about the ability of many schools to actually get clear alternatives in place within the short run. I hope I am wrong.

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-Adam Markus
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