Citibank has announced that in July it will start waiving the final six payments that borrowers are scheduled to make on their federal student loans.

In a news release issued on Thursday, Citibank officials said they were making the offer “to further assist students in meeting the financial challenges they may face as they plan for life after college.” But industry observers said that Citibank was moving aggressively to challenge its biggest competitors in the federal-student-loan marketplace, such as Sallie Mae, the nation’s largest student-loan provider.

Citibank officials, and some other lenders, said they believe the bank’s offer is unique. It comes six months after the company announced that it would cover the 3-percent fee that borrowers must pay to obtain the loans (The Chronicle, November 14, 2005).

“Zero origination fees at the front end and zero payments at the back,” said Kurt Schneiber, executive sales director of the Student Loan Corporation, Citibank’s student-loan division. “No one else offers this powerful combination nationwide.”