The University of Pennsylvania has agreed to modify one of its student loan programs, which is offered by Citibank, in response to a recent inquiry made to the University by the New York Attorney General. Penn will reimburse all participants who borrowed from the Penn CitiAssist program for fees paid by Citibank to the University. Penn had used these fees to provide financial-aid for its students. This student loan program is distinct from Penn's need-based undergraduate financial aid program and assists students who are not eligible for need-based financial aid.
Penn will modify its arrangements with Citibank to ensure that borrowers are reimbursed for their share of the fee, and Penn will no longer accept fees from Citibank in connection with this program. The University estimates that the average amount a student will be reimbursed is $500, depending upon the amount borrowed. This change principally affects graduate and professional students, who participated in the program in academic years 2006 and 2007.
The only practice identified by the New York Attorney General that Penn engaged in was the payment of fees by Citibank to the University. In addition to agreeing to the elimination of these fees, Penn also will adopt the New York Attorney General's Code of Conduct, which promotes best practices for student lending. Once Penn modifies the CitiAssist program, it will be in full compliance with the proposed Code of Conduct. Penn does not engage in any of the practices that have been widely reported in the media (such as outsourcing of call centers, gifts to employees or remuneration for serving on lending advisory boards).
"The CitiAssist program offered competitive rates and terms for our students at an interest rate equal to the prime rate or lower. To avoid any appearance of impropriety, the University has decided to settle the matter," said Craig R. Carnaroli, executive vice president. "We regret any confusion this may have caused."
The University of Pennsylvania is a leader in the field of need-based financial aid and has a strong commitment to making the cost of a Penn education affordable for its undergraduate, graduate and professional students. For the current academic year, Penn provided $275 million in financial aid to its students, a 9% increase over the prior year. Penn provides many student loan program options to its undergraduate, graduate and professional students and ensures that loan terms are as competitive as any in the nation.
For further information contact Student Financial Services.