Citigroup Steps Out from The Student Loan Business

Published on Friday, September 24th, 2010 by James Category: College News

New York – Citigroup, one of the premier providers in student loans has decided that it’s time for them to sell the student loan division of the corporation and step out of the financial aid business altogether. Discover Financial Services and Sallie Mae are two student loan providers that hopped on the opportunity to buy student loans from Citigroup while they’re making an industry exit.

The sales made so far are $28 billion dollars in federal student loans to Sallie Mae and $4 billion dollars in private loans to Discover Financial Services. While this may seem like a lot of money being thrown around, Citigroup is still holding onto a lot more student loans that will be sold at a later date.

The Cause

Citigroup is one of the companies who isn’t focused solely on providing student loans. With the Obama Administration tightening things up on the private loan sector, Citigroup sees this as a wake up call. Now, they are selling off for the sole reason of student loans not being a core service that this huge corporation offers.

The Outcome

Sallie Mae will be servicing over a million new student loans thanks to this deal. Discover Financial Services is also increasing their footprint within the student loan industry thanks to this sale from Citigroup. For both companies, it’s a great opportunity to experience the growth that they need in order to have a successful future in store for them.

What we’re seeing here is the student loan industry becoming an industry where dominant companies are reaping the many benefits that are given to them. Competition seems to be thinning out, and many claim that it’s just the beginning of mergers and acquisitions within the student loan industry.

If that’s true, student loan portfolios may be a good investment for companies who have been looking for a way to increase their presence among the many student loan providers in the United States. It’s definitely an opportunity to take the business to a whole other level.

If you would like to read more on this Citigroup student loan situation, visit Citigroup Financial Aid.

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