Citibank Transfers Student Loan To Another Company, But Sits On $1000 Payment For 30 More Days

The last time I uncovered an obvious error with my Citibank checking account, I realized it was time to move on. Our tipster Roarke may have just reached that same conclusion, only in his case Citibank has already passed along the account for him–just not the thousand dollar electronic payment he made on it a few days prior, which Citibank says it plans to hang on to for another 30 days.

I just found out by logging into the Citibank student loan website that my Citi student loan was transferred to another servicing company (Great Lakes) on 9/27. This would be four days after I made an online payment of $1000. The $1000 payment was deducted from my bank account on 9/23.

When I logged in to the Great Lakes web site and checked the transferred loan balance it did not include the $1000 payment that Citibank was now holding. The Citibank site shows the payment as pending.

I called the Citibank 800 number to find out what was going on as I had received no notice of the loans being transferred. The response was that they had just found out about the transfer on 9/24 and hadn’t had time to send out letters.

I asked about the payment which had already been debited from my checking account and was told that it could take up to 30 days for them to process the payment. I explained to the CSR that the payment had obviously already been processed as it had been debited from my checking account. I was told that they had to hold the payment for 30 days to make sure there were no problems with the payment. This would be the payment of $1000 against my now $0 loan balance.

I was told to contact Great Lakes to make sure there would be no problems with the funds when they finally processed them (30 days from now). I asked if I would be receiving accrued interest on the $1000 as it sits in Citibank for the 30 days while they make sure that the $1000 credit doesn’t have any “problems”. The response was that there would be no interest accrued on the funds.

I think when a bank grows so big that its own student loan division says it was caught off guard by the sale of its assets to another company, it’s time to move on.

Then again, there’s been a lot of shuffling of student loan operations between large financial powerhouses lately (due to changing regulations), so you can rest assured that your situation is not unique.