Citigroup To Exit Private Student Loan Business

Citigroup Inc. will exit its private student loan business after its indirect subsidiary, Student Loan Corporation, agreed with Discover Financial Services and Sallie Mae to divest its business through a string of transactions.

Citi has an 80% ownership in Student Loan Corp., and the rest is owned by public shareholders.

Under the deal, Discover plans to acquire Student Loan Corp. and its $4 billon of its private student loans. Sallie Mae will acquire $28 billion of securitized federal student loans and related assets from Student Loan Corp.

Citi will acquire certain federal and private student loans and other assets totaling $8.7 billion from Student Loan Corp.

Student Loan Corp. also will sell $4.7 billion in Federal Family Education Loan Program loans to the Department of Education. Shareholders of Student Loan Corp. will receive $30 per share following the deal closure. The transaction is expected to close by the end of the year, subject to regulatory approvals.

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