Citizens vs Funding U: Which private student loan fits your situation?

Citizens Bank is best for borrowers with strong credit histories or creditworthy cosigners, offering competitive rates through traditional underwriting. In contrast, Funding U is designed for students without credit or cosigners, using merit-based criteria like GPA and projected earnings to determine eligibility.

Choosing the right lender is not just about comparing interest rates; it is about finding the loan that fits your specific financial profile and academic path. In this guide, you will learn the distinct eligibility requirements for each lender, how their repayment terms compare, and which unique benefits might save you money over the life of the loan. Whether you are a parent trying to protect your credit score or a student seeking financial independence, understanding these differences is the first step toward funding the gap in your education costs.

While both lenders provide private student loans, they solve different problems for different families. Citizens operates as a traditional bank, rewarding financial stability and creditworthiness with lower costs. Funding U operates as a specialized fintech lender, providing access to capital for students who might otherwise be shut out of the private loan market due to a lack of credit history. By the end of this comparison, you will be able to determine which underwriting model aligns with your reality.

Understanding credit-based vs merit-based underwriting

To choose between these two lenders, you must first understand the fundamental difference in how they decide who gets a loan. This distinction, known as underwriting, dictates not only your approval odds but also the interest rate you will be offered.

Credit-Based Underwriting (Citizens Bank)
Citizens Bank utilizes a traditional credit-based model. This approach evaluates the borrower’s (and typically the cosigner’s) FICO score, credit history, and debt-to-income (DTI) ratio. The lender views past financial behavior as the best predictor of future repayment. Consequently, approval and competitive rates generally require a strong credit profile or a creditworthy cosigner. This model is standard for most banks and rewards families who have established financial stability.

Merit-Based Underwriting (Funding U)
Funding U employs a merit-based model designed specifically for students who have not yet had the time to build a credit history. Instead of focusing solely on FICO scores, Funding U evaluates academic performance and future potential. They analyze data points such as your Grade Point Average (GPA), major, university, and projected earnings upon graduation. This model assumes that a successful student in a strong major at a reputable school is a low risk, even without a cosigner or a long credit history.

Quick comparison: Citizens Bank vs Funding U at a glance

Before diving into the fine print, this high-level comparison highlights the structural differences between the two lenders. Use this table to quickly identify which lender’s criteria match your current situation.

Source: Citizens Bank and Funding U General Disclosures (as of January 2025)

If you have a creditworthy cosigner and are looking for the lowest possible interest rate and flexible repayment timelines, Citizens Bank is likely the stronger starting point. However, if you are an undergraduate student with a strong GPA but no cosigner, Funding U offers a specific solution designed to assess you on your own hard work rather than your parents’ credit history.

Eligibility requirements: Who qualifies for each lender

Beyond the underwriting models, both lenders have strict eligibility checklists regarding citizenship, enrollment status, and school selection. Qualifying for one does not guarantee qualification for the other, as their requirements diverge significantly.

Citizens Bank Requirements
Citizens generally casts a wider net regarding school eligibility but maintains stricter personal financial requirements. To qualify, you typically need:

• Citizenship: You must be a U.S. citizen or permanent resident. International students can apply if they have a creditworthy cosigner who is a U.S. citizen or permanent resident.
• Enrollment: You must be enrolled at least half-time in a degree-granting program.
• School Eligibility: Citizens lends to students attending a vast network of Title IV eligible institutions, including community colleges and four-year universities.
• Credit Criteria: A good to excellent credit score and a sufficient income history are required. Most undergraduate applicants will need a cosigner to meet these thresholds.

Funding U Requirements
Funding U is more selective about the school and student performance but more lenient on credit history. To qualify, you must meet these criteria:

• Citizenship: Available to U.S. citizens, permanent residents, and DACA recipients with a valid work permit.
• Enrollment: You must be enrolled full-time at an eligible four-year non-profit college or university. They generally do not lend to students at for-profit schools or community colleges.
• Academic Standing: As a merit-based lender, according to Funding U, they require a minimum GPA (often 2.5 or higher) and review your academic progress.
• Credit Criteria: No credit score is required, but you cannot have a history of credit defaults or bankruptcies.

If you are unsure about your enrollment status or school eligibility, review your details in our FAFSA guide to ensure you are classified correctly before applying.

Interest rates and APR comparison

Interest rates determine the total cost of your loan, and the way these two lenders assign rates reflects their different risk models. While rates fluctuate with the market, the philosophy behind them remains consistent.

Citizens Bank Rates
As of January 2025, Citizens Bank offers both fixed rates of 5.99% - 15.00% APR and variable rates of 6.98% - 15.69% APR. Because they lend to creditworthy borrowers (or those with strong cosigners), their advertised lowest rates are often highly competitive. Your specific rate within their range is determined by your credit score, the cosigner’s credit strength, and the repayment term you choose. Generally, the shorter the term and the higher the credit score, the lower the interest rate.

Funding U Rates
As of January 2025, Funding U typically offers fixed rates of 7.99% - 13.49% only. Their rates are generally higher than the absolute lowest rates advertised by banks like Citizens. This is because lending to students without cosigners carries higher risk. However, their rates are often competitive compared to the higher end of traditional bank ranges. Your rate is determined by your academic profile and projected earnings rather than a FICO score.

Rate Discounts
Both lenders encourage responsible repayment behavior through discounts. According to lender disclosures as of January 2025, both Citizens and Funding U offer a 0.25% interest rate reduction if you enroll in automatic payments. This small percentage can save a significant amount of money over the life of a ten-year loan.

According to Mark Kantrowitz, financial aid expert, “Private loans can offer variable interest rates, which may be lower than federal fixed rates initially.” While Citizens offers this variable option, borrowers should weigh the risk of rates rising over time against the stability of a fixed rate offered by both lenders.

Loan amounts and repayment terms

The amount you can borrow and how long you have to pay it back are critical factors in your monthly budget. Citizens Bank functions as a primary funding source, while Funding U is often best utilized as a gap financing tool.

Citizens Bank Limits and Terms
According to Citizens Bank as of January 2025, you can typically borrow from $1,000 up to the total cost of attendance minus other financial aid received. Aggregate limits (the total amount you can borrow over your college career) are high, often exceeding $100,000 for qualified borrowers. They also offer flexibility in repayment timelines, with terms usually available for 5, 10, or 15 years. This allows families to choose between paying off debt quickly to save on interest or extending the term to lower monthly payments.

Funding U Limits and Terms
According to Funding U as of January 2025, annual loan limits generally range from $3,001 to $20,000. There is also a lifetime aggregate limit for undergraduate loans. Because of these caps, Funding U is rarely a solution for covering the entire cost of a private university education; it is designed to fill the “gap” after federal aid and scholarships are exhausted. Regarding repayment, Funding U typically offers a single term option of 10 years, providing less flexibility but a predictable payoff date.

For a broader look at how these limits compare to federal options, visit our student loans guide.

Repayment options while in school

Managing cash flow while studying is a major concern for students. Lenders offer different ways to handle the loan during the in-school period, which affects the total amount paid back.

Citizens Bank In-School Options
Citizens provides the full suite of standard repayment options. Borrowers can choose:

• Immediate Repayment: Start paying full principal and interest immediately (saves the most money).
• Interest-Only Payments: Pay only the accruing interest while in school to prevent the balance from growing.
• Full Deferment: Make no payments while enrolled. Interest will accrue and be added to the principal (capitalized) when repayment begins.

Funding U In-School Options
According to Funding U as of January 2025, they generally require borrowers to make some form of payment while enrolled, typically either interest-only payments or a fixed minimum monthly payment (e.g., $20) while you are in school. They usually do not offer a full deferment option where $0 is due. This policy helps students build payment habits and prevents the loan balance from ballooning due to capitalization, but it does require the student to have a small monthly cash flow.

Both lenders typically offer a 6-month grace period after graduation before full principal and interest payments are required.

Fees and borrower benefits

Beyond interest rates, the fee structure and added benefits can differentiate a good loan from a great one. While neither lender charges prepayment penalties, their approach to fees and perks highlights their different business models.

Fees Comparison
As of January 2025, Citizens Bank charges no origination fees, application fees, or disbursement fees. Funding U also typically does not charge origination fees, though it is essential to verify this in your specific loan offer, as fintech terms can vary by state or program. Both lenders charge late fees for missed payments and fees for returned payments.

Unique Borrower Benefits
According to Citizens Bank as of January 2025, they often offer a “loyalty discount” (typically 0.25%) if you or your cosigner already has a qualifying account with the bank. Combined with autopay, this can lower rates significantly. Funding U focuses its benefits on student success, offering access to career mentorship and resume reviews, aligning with their mission to support your future earnings potential.

Cosigner Release
This is a major point of difference. According to Citizens Bank as of January 2025, borrowers can apply to release their cosigner after making 36 consecutive, on-time principal and interest payments, provided they meet credit and income requirements on their own. Funding U does not offer cosigner release because they do not require a cosigner in the first place.

According to Mark Kantrowitz, financial aid expert, “Cosigner release is a valuable feature offered by some private lenders, rewarding responsible repayment.” For parents, this Citizens feature offers a clear “exit strategy” from the financial obligation.

Application process differences

The logistics of applying reflect the technological focus of each lender. Knowing what to expect can help you gather the right documents beforehand.

Applying with Citizens Bank
The process is similar to applying for any bank product. You will complete an online application that triggers a hard credit check for both the borrower and the cosigner. You will need to provide social security numbers, income verification (pay stubs or tax returns for the cosigner), and school information. Approval can be quick, but finalizing the loan may take a few weeks depending on how quickly the school certifies the loan.

Applying with Funding U
The application is entirely digital but requires different documentation. You will start with a soft credit check (which does not impact your score) to see if you qualify. You will need to upload an unofficial transcript to verify your GPA and credit hours, along with your financial aid award letter. Because they verify academic data manually, the timeline can sometimes vary, though the digital interface is designed for speed.

For more details on preparing for applications, read our private student loans guide.

Who should choose Citizens Bank

Citizens Bank is a strong contender for families looking for stability, competitive pricing, and flexibility. You should prioritize this lender if:

• You have a creditworthy cosigner: Most students will qualify for significantly lower rates with a parent or guardian cosigning.
• You need to borrow a large amount: If you need to cover the full cost of attendance (tuition plus room and board) at a private university, Citizens’ higher loan limits are essential.
• You want repayment flexibility: If having the option to choose a 5, 10, or 15-year term is important for your budget planning.
• You are an existing customer: The potential for loyalty discounts makes Citizens even more attractive for current account holders.

Who should choose Funding U

Funding U fills a crucial gap in the market for students who are betting on their own future success. You should prioritize this lender if:

• You do not have a cosigner: This is the primary reason to choose Funding U. If your parents cannot or will not cosign, this lender offers a legitimate path to funding.
• You are a strong student: If you have a solid GPA (generally 2.5+) and are progressing well in your degree, your hard work directly translates to loan eligibility.
• You only need gap financing: Since their limits are lower (up to $20,000/year), they are perfect for covering the last few thousand dollars left after federal aid.
• You are independent: DACA students or independent students without family financial support often find Funding U’s criteria more inclusive.

Frequently asked questions

Can I get a Citizens Bank student loan without a cosigner?
Technically yes, but it is difficult for most undergraduates. You would need to meet their income and credit score requirements on your own, which typically requires an established credit history and steady full-time income—two things most full-time students lack. See the Eligibility Requirements section above.

Does Funding U check credit scores?
Funding U performs a soft credit check to ensure you don’t have a history of default or bankruptcy, but they do not use a FICO score to determine your interest rate or approval. This soft check does not impact your credit score.

Which lender has lower interest rates?
For a borrower with an excellent credit score and a strong cosigner, Citizens Bank generally offers lower interest rates. Funding U’s rates are competitive but typically higher than the “floor” rates of traditional banks to account for the risk of lending without a cosigner.

Can I refinance a Funding U loan later?
Yes. After you graduate, secure a job, and build your credit history, you can apply to refinance your Funding U loan with a different lender to potentially lower your interest rate.

How long does approval take?
Both lenders offer conditional approval within minutes online. However, final disbursement depends on your school’s financial aid office certifying the loan, which can take anywhere from a few days to a few weeks for either lender.

Choosing between Citizens Bank and Funding U ultimately comes down to your access to credit. Citizens rewards the financial history of your family, while Funding U bets on the academic future of the student.

Key Takeaways:

• Check your cosigner options first: If a parent can cosign, Citizens Bank will likely offer lower rates and higher loan limits.
• Assess your academic standing: If you are on your own, Funding U provides a vital lifeline, provided you are attending an eligible 4-year school with good grades.
• Compare total costs: Remember that a slightly higher rate from Funding U might be worth it if it means you don’t have to burden a family member with cosigning.
• Exhaust federal options: Before applying to either, ensure you have maximized federal Direct Loans by completing the FAFSA, as federal loans offer protections private lenders cannot match.

Once you have reviewed your federal loan options and gathered your documents, you are ready to check your rates. Most lenders allow you to see your estimated rate with a soft credit check, so you can compare offers without hurting your score.

Ready to see what rates you qualify for?
Compare rates from 8+ lenders
Trusted by 50,000+ students and families. Soft credit checks won’t impact your score.

References and resources

For further research and to verify the most current terms, consider visiting these official resources:

• Citizens Bank Student Loans – Official lender page for rates and terms.
• Funding U – Official site for merit-based loan applications.
• StudentAid.gov – The U.S. Department of Education’s resource for federal aid comparison.
• CFPB Paying for College – Unbiased tools for comparing financial aid offers.

Note: Interest rates and loan terms are subject to change. Always verify the latest information directly with the lender before applying.