Head of Student Lending, Citizens Bank
Industry experience: 30 years
When Christine Roberts found out that her parents could not pay for her senior year of college, she turned to a local bank for a last-minute loan. After Roberts began her career in financial services, this experience inspired her to want to work someday in student lending, a goal reached four years ago when she became head of Citizens Bank’s student lending group. The team works with families not just on options for private lending and refinancing, but also on determining whether borrowing for school is even the right decision for the family.
With U.S. student debt around $1.5 trillion and the average student graduating with more than $30,000 of debt – not including parents’ debt – Roberts said the federal government and universities must make changes to prevent more families from being saddled with debt they can’t afford.
Q: How do private loans differ from federal student loans?
A: Federal loans are really a one–size–fits–all. There’s no credit requirement really, no underwriting, no view of an ability to repay. We’re very much in support of the federal Stafford program and the Perkins Loans. Where we start to have concerns with the federal program is with the Parent PLUS Loans, which again have no credit requirement, no ability–to–repay view. Families who don’t have the ability to pay off these loans are borrowing money in the hopes that their child finishes college, in the hope that their child is going to be able to pay it off. And quite frankly, we don’t think that’s the way student lending should really operate.
Private loans operate within what we call risk–based pricing. We look at your credit profile, we look at your ability to repay. About 95 percent of the undergraduate loans or in–school loans are co–signed, so the student and the parent hold a joint responsibility. With private loans, we look at your total financial picture and make sure that you are really able and capable of taking on this debt so that it’s not putting you and your family in a bad financial situation.
Q: What are some strategies for addressing the amount of student debt in America?
A: I really believe what we have is a cost–of–tuition issue, first and foremost. Go back about 30 years when the federal government removed the cap on the PLUS loans and, lo and behold, cost of tuition skyrocketed. There was no longer a limit to the amount that a family could borrow.
I think what really needs to be done is we need to put caps back on. Because if you put caps back on how much families can borrow, then the schools are going to have to realign with how much families really can spend. Or they’re going to have to give away more money. I think both cases are actually the right outcome for families.
So, in the meantime, we have basically an entire generation that’s got substantial debt from going to universities and college. Many of them have reaped fabulous rewards from it, so that’s fantastic. Unfortunately, today, the graduation rate after six years is only about 62 percent.
If you think about families who have taken on debt and their kids have not been able to finish school – which by the way is the number one indicator for default – we need to do a better job making sure we’re educating families on the debt that they’re taking on and making sure families really understand whether or not it’s right for their child to go to college – there’s plenty of phenomenal careers out there that don’t require a college education – or whether or not a child should delay going to school for a year until they are academically ready or go to a community college.
Q: What changes could help future students?
A: I’m the chairperson of the Consumer Bankers Association Education Funding committee. We spend a lot of time on Capitol Hill trying to work with and have some reasonableness put back into the federal aid student program.
One of the things that we talk about often is disclosures. The federal government does not have to follow the Truth in Lending Act like we do. We are required to say: “Here’s exactly what you borrowed, here’s what your APR is, your APY, here’s how much your payment will be when you go into repayment and here’s how much you’d pay in total over the life of the loan.“ The federal government doesn’t do that. We’re very much advocating a similar truth–in–lending disclosure.
Additionally, the private industry sends out an annual know–what–you–owe letter. Every year that you borrow – because most people will borrow for the four years of school – we continue to add to that letter. I think it’s incumbent upon the federal government as well as private lenders to make sure that families understand what they’re borrowing, what they’re paying off.
A lot of schools still call the financing letter, “your award letter.” If you ask a 17–year–old what an award is, none of them will say you have to pay it back. Many schools also prepackage the Parent PLUS loans, which allows them to put net price that you owe as zero. For a lot of families that don’t know better, they’re taking out loans that they probably don’t understand or they’re taking out loans when they don’t know they have other options that could be better for them. We’re spending a lot of time advocating for changes to [those letters].
You’ve got a marketplace that is willing to work and take care of folks who can borrow and should borrow. Let the marketplace – the private lenders – do what they do best with families to help protect them. Then let government really be a lender of last resort and/or allow them to give away more money to the families that really need it.
Q: What advice do you have for families?
A: My number one advice for families going into this process: Make sure you talk to your children about what you can really afford, what they can really afford, and not just have them fall in love with one school that really is outside of your financial reach and then you stretch beyond what your family can really do. Because it will affect your retirement; it will affect your children’s future. We call it the “other talk” you have to have with your kids.
Roberts’ Five Favorite Movies:
- The Princess Bride
- The Godfather
- Black Hawk Down
- Saving Private Ryan
- Sleepless in Seattle