If the bank handling my college loans goes bankrupt, how will I be affected?
I am a first year college student at Dartmouth College and have taken out a hefty amount of loans for my first year tuition. I know with the recent Wa Mu bankruptcy, that many other banks are in danger of following in Wa Mu’s footsteps. If by chance Citibank were to collapse what would become of my loans. And with our recent recession, how will I be affected in my ability to attain loans and secure a job post graduation?
The loan won’t go away. It’ll simply be sold to a new bank.
From your perspective, the only thing that would change is the address on the payment stub or however you make the payment.
The amount, interest rate and other terms for the loan remain the same.
Even if Citibank were to get bought by another bank, as Wamu did, the merger will take a few years to fully complete. In the meantime, you would still deal with Citibank. Your branch, account #, and all other information would remain the same for now. Eventually you will get a letter explaining how your accounts and everything will be merged over to the new bank, but access to your accounts and all that would remain uninterrupted.
Even if this didn’t happen, I had my student loans sold off to new banks while I was repaying them. All that happened was I got a letter from the old bank saying they’d sold my loan to a different bank. I then got a letter from the new bank explaining they had purchased my loan, and any differences I needed to be aware of. For instance, one bank used a book of repayment coupons I would just mail in with my check each month, whereas the other bank would send me a monthly statement.
Trust me, "they" want their money! Even if the actual name of "they" changes, they will make sure you know where to send the money.
As for the post-college economy…don’t worry about it too much right now. A lot will happen in the next 4 years – both to our country and to you personally. Just worry about getting through college as best you can. Once you’ve decided on a major, try to get an internship, co-op, or part time job in your field. This, more than any class you will take, will help you get a job after graduation.
Your student loans are still through the government even if it with a bank. You will stay have to repay the loans no matter if the bank went bankrupt or not.
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Your loan is considered an account that earns interest for the bank and therefore an "asset" by the bank and will be acquired by another bank.
Keep paying your loan. Should something occur you will be notified on whom to start making payments to should any changes be necessary. Make sure your contact information is up to date, so that you can receive any important information.
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Keep all your statements and cancelled checks or payment receipts. If payments or records get lost you may have to prove your case..
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The loan won’t go away. It’ll simply be sold to a new bank.
From your perspective, the only thing that would change is the address on the payment stub or however you make the payment.
The amount, interest rate and other terms for the loan remain the same.
Even if Citibank were to get bought by another bank, as Wamu did, the merger will take a few years to fully complete. In the meantime, you would still deal with Citibank. Your branch, account #, and all other information would remain the same for now. Eventually you will get a letter explaining how your accounts and everything will be merged over to the new bank, but access to your accounts and all that would remain uninterrupted.
Even if this didn’t happen, I had my student loans sold off to new banks while I was repaying them. All that happened was I got a letter from the old bank saying they’d sold my loan to a different bank. I then got a letter from the new bank explaining they had purchased my loan, and any differences I needed to be aware of. For instance, one bank used a book of repayment coupons I would just mail in with my check each month, whereas the other bank would send me a monthly statement.
Trust me, "they" want their money! Even if the actual name of "they" changes, they will make sure you know where to send the money.
As for the post-college economy…don’t worry about it too much right now. A lot will happen in the next 4 years – both to our country and to you personally. Just worry about getting through college as best you can. Once you’ve decided on a major, try to get an internship, co-op, or part time job in your field. This, more than any class you will take, will help you get a job after graduation.
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Former student loan holder, and customer of WaMu…now moving to a credit union because I don’t want to be a customer of Chase. Woohoo!
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