Executive Summary
- Citizens Bank wants to expand its private college lending expertise into a broader thrust for growth in loans and deposits and for long-term customer acquisition.
- Having acquired College Raptor, an online college planning site, in 2022, it is integrating that platform with other bank products to deliver a student banking “hub.”
- Meanwhile, the end of the federal “Grad Plus” program will double demand for private graduate school loans. Citizens wants a piece of that action.
Citizens Bank is mining the private student loan business, broadening the bank’s strategy to attack longer-term opportunities. Simultaneously, the bank is developing plans to take competitive advantage of major changes coming in 2026 that experts believe will double the size of the private market for graduate school student loans.
The bank’s concentration on the student market — which includes parents — ties into Citizens’ strategic shift to focus more on upmarket customers.
The bank’s execution has included acquisition of College Raptor, an online college planning platform purchased in late 2022 and the unveiling in late September of its digital Student Banking Hub.
Underpinning the bank’s thrust is a belief that the student market, often focused exclusively on the college years, is actually composed of four life stages.
Each has its own needs that can be met with an evolving mixture of products. These stages include the high school years, the period nearing college application and acceptance, the college years, and the years beyond college. The bank hopes that the final stage will deliver ongoing relationships with graduates as they require more banking services.
A key part of this new approach is a growing library of digital content to assist people at each stage with common financial challenges, supplemented with webinars and live seminars.
“Historically, we have been focused largely on the financial aspects. But there’s a lot more to going to college than just financing school,” says Chris Ebeling, EVP and head of student lending. “We needed to engage students and their families in ways that weren’t purely financial.”
Growing the Student Market from a Credit Core
Currently, Citizens’ student lending effort consists of two main categories. The first is education loan refinance, predominantly refinancing government loans. At the end of the third quarter, this portfolio totaled $5.3 billion. The second is education loans provided during students’ time in undergrad and graduate work, which came to $3.3 billion in the same period. Combined, both are nearly 13% of the bank’s retail credit portfolio.
A key differentiator for Citizen’s student lending program is its multi-year approval feature for qualifying borrowers and parents.
When an applicant seeks a loan in their freshman year, the bank does a single hard pull on their credit, explains Ebeling. If the applicant is eligible, the bank will offer them authorization for their estimated needs for the duration of their undergraduate work. Actual disbursements each year are made for their annual needs. In each subsequent year, the bank performs only a soft pull. By contrast, says Ebeling, the bank’s competitors — especially market leader Sallie Mae — typically do a hard pull and a fresh credit analysis every year.
Ebeling says the multi-year approval option has been a major selling point for Citizens as it works with individual schools to be included in the financial aid department’s list of preferred lenders.
Ebeling first came to Citizens in 2017 as EVP for corporate strategy and development. Past posts included more than a decade in consulting at Bain & Co., and Ebeling initially concentrated on finding acquisition candidates for the bank.
Later, the opportunity to take charge of student lending arose. Not long into the job the bank saw the opportunity to satisfy people’s need for information and advice. Ebeling says several platforms offered content and tools for the college-bound and their parents, but College Raptor was the best. Among its features are side-by-side comparisons of potential scholarship aid at schools.
“With College Raptor, with our deposit and lending products, we have had the broadest set of capabilities out there for students and their families. But our customers didn’t know it,” says Ebeling.
The problem was that the products and services resided in corporate silos. College Raptor, a wholly owned subsidiary of the bank now, was isolated.
“It was not coming together in a way that was holistic,” says Ebeling.
Read more:
link