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Discover Student Loans Review: Private Loans and Refinancing

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Discover Bank, known primarily for its credit cards business, launched Discover Student Loans in 2007. Today, it offers private student loans and student loan refinancing, which it calls private consolidation. We review both products in this article:

Discover private student loan review

Discover private consolidation loan review

Discover student loan refinancing review

Discover began offering student loan refinancing, which it calls private consolidation, in 2016. Student loan refinancing means replacing one or more student loans with a single lower-rate loan. It may be right for you if you:

  • Have private student loans
  • Have federal student loans and don’t plan to use federal benefits such as income-driven repayment and loan forgiveness (you’ll lose access to those programs if you refinance)
  • Have good credit, a stable income and a history of paying your debt on time

You’ll save the most money by choosing the shortest repayment term you can manage. Refinancing isn’t for you if you have poor credit, an uncertain job situation or have federal loans and want to pursue an income-driven repayment plan or loan forgiveness program.


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DISCOVER STUDENT LOAN REFINANCING AT A GLANCE

  • Fixed rates: 5.24% to 8.24% APR; Variable rates: 4.12% to 7.37% APR
  • Loan duration: 10 or 20 years
  • Eligible loan balances: $5,000 to $150,000

Rates updated Feb. 2, 2018

Lowest listed APRs include the 0.25% rate reduction that borrowers get for signing up for automatic payments.

» MORE: Compare student loan refinance lenders

Can you qualify?

Discover doesn’t disclose specific details about what it takes to qualify for its private consolidation loan, but you’ll likely be accepted if you:

  • Have good credit. Lenders typically look for borrowers with FICO scores in the high 600s, at least.
  • Consistently make loan payments on time. Discover will evaluate your payment history and debt-to-income ratio.
  • Are a U.S. citizen or permanent resident.
  • Attended an eligible school. Your loans must have been used to pay for a program that’s part of the government’s Title IV financial aid program.

How to refinance with Discover

Before deciding on a student loan refinance lender, compare multiple options to make sure you’re getting the best rate you qualify for. In addition to interest rates, compare lenders’ repayment options and the flexibilities they offer for borrowers who are struggling to make payments.

If you’re ready to refinance with Discover, you can apply on Discover’s website. Here’s how.

  1. Complete an application. The application takes about than 15 minutes, according to Discover’s website. You’ll need your:
  • Social Security number, if you have one
  • Gross annual income and nontaxable income. You can find these amounts on your most recent tax return, W-2  or 1099 forms.
  1. Agree to let Discover pull your credit. This may cause your credit score to dip slightly, but most lenders need to check credit history before approving borrowers for a loan.
  1. Add a co-signer. Your rate may be lower if you apply with a co-signer. To do so, select “add a co-signer” when you apply to receive a “cosigner key” code. Give the code to your co-signer to use when he or she applies — it will link your applications together.
  2. Approval. You’ll see the rate you qualify for after you’re approved for the loan.
  3. Finish the paperwork. Once you apply, the loan takes 30 to 45 days to process. During that time, you’ll need to sign the loan documents and submit payoff statements from your existing lender to verify the loans you’re consolidating.

More details

  • Loan servicer: Discover
  • Application or origination fee: None
  • Prepayment penalty: None
  • Late fees: None
  • Co-signer release available: No

Repayment options for struggling borrowers

You’ll save the most money by repaying the loan as fast as possible. However, Discover offers relatively generous flexibility if you’re struggling to make payments:

    • Deferment: Postpone loan payments if you’re in school at least half-time, are on active military duty, are doing a medical residency or are serving in a qualified public service organization
    • Forbearance: Postpone loan payments for up to 12 months if you’re unemployed, have a medical disability or have another financial hardship. Interest will still accrue while the loan is postponed.
    • Temporary interest rate reduction: Get a lower interest rate, resulting in a lower monthly payment, for up to 12 months. Payments are subject to a $50 minimum per month.
    • Temporary payment reduction: Pay just the interest on your loan, subject to a $50 minimum, for up to six months. Your loans must be less than 60 days late to qualify.

Discover student loan refinancing FAQs

  • Can I apply with a co-signer? Yes; you’ll likely get a lower rate if you do
  • Is there a co-signer release option? No
  • Can I qualify if I’ve filed for bankruptcy in the past? Yes, though you’re more likely to qualify if the bankruptcy isn’t recent
  • Can I qualify if I didn’t go to a Title IV-accredited school? No
  • Can I qualify if I didn’t graduate? Yes

» MORE: Read more student loan refinancing FAQs

Contact Discover

Discover 24/7 student loan specialists: 800-788-3368


Discover private student loan review

Discover is the third-largest private student loan provider, according to the company’s 2016 annual report. It offers student loans for undergraduates and graduate students including MBA candidates, law students and students studying health professions such as medicine, dentistry and nursing. It also offers residency loans for health professionals and bar exam loans for lawyers.

A Discover private student loan may be right for you if you:

  • Need to fill a gap in the financial aid you received after filling out the Free Application for Federal Student Aid, known as the FAFSA.
  • Have good credit or a creditworthy co-signer.

» COMPARE: Private student loans


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DISCOVER STUDENT LOANS AT A GLANCE

  • Fixed: 6.49% to 12.99% APR. Variable: 4.62% to 11.87% APR.
  • Loan duration: 15 or 20 years
  • Loan amounts: $1,000 minimum. Maximum: Your total cost of attendance, minus other financial aid.

Rates updated Feb. 2, 2018.

Before borrowing a private student loan from Discover or any lender, submit the FAFSA to apply for federal grants, work-study and federal student loans. Max out federal student loans before using private ones because federal loans have more borrower protections and don’t require a co-signer.

» MORE: NerdWallet’s FAFSA Guide

Can you qualify?

Discover doesn’t disclose specific details about what it takes to qualify for its student loans, but there’s a good chance you’ll qualify if you’re age 16 or older and you:

  • Have good credit. Unlike federal student loans, private loans are credit-based. 95% of the student loans on Discover’s books are from borrowers with FICO scores of 660 or higher, according to the company’s 2016 annual report. If you have a low score or don’t have an established credit history, you can still qualify if you apply with a creditworthy co-signer.
  • Attend an eligible school. You must be enrolled at least half-time in a federal Title IV program at a nonprofit school, and be pursuing an associate degree or higher and demonstrating satisfactory academic progress.
  • Have U.S. citizenship or are a permanent resident. International students are eligible if they apply with a co-signer who is a U.S. citizen or permanent resident.

Discover also considers other factors, such as area of study and potential income, when determining whether a borrower is likely to be able to make payments in the future.

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How to apply for a Discover student loan

Before you take out a private student loan, compare your options to make sure you’re getting the best rate you qualify for. In addition to interest rates, compare lenders’ repayment options and the flexibility they offer for borrowers who are struggling to make payments.

If you’re ready to borrow through Discover, you can apply on Discover’s website. Here’s how:

  1. Complete an application. It takes about 15 minutes to apply if you have the necessary information ready, according to Discover’s website. You’ll need your:
  • Social Security number, if you have one
  • School information: Name, location, anticipated degree and field of study, expected graduation date and grade point average
  • Financial aid award letter with your school’s cost of attendance and your estimated financial aid
  • Gross annual income and nontaxable income. You can find this information on your most recent tax return, W-2 or 1099 form.
  1. Agree to let Discover do a hard credit check. This may cause your credit score to dip slightly, but most lenders need to do one before approving borrowers for a loan.
  1. Add a co-signer. Your rate will likely be lower if you apply with a co-signer. To do so, select “add a co-signer” when you apply. You’ll receive a “cosigner key” code to give to your co-signer to use when he or she applies — it will link your applications together.
  2. Approval. You’ll see the rate you qualify for after you’re approved for the loan.
  3. Sign the required documents. You’ll need to sign a loan promissory note, which you can do online.
  4. Wait for the funds from your school. After receiving your application, Discover will verify your eligibility and loan amount with your school — this process can take three to five weeks. Once the loan is certified, Discover will disburse the loan to your school. Your school will apply the loan to your account and forward any remaining funds to you to cover education-related expenses, such as books.

Loan details

  • Grace period: 6 months for undergraduates, 9 months for graduates
  • Loan servicer: Discover
  • Application or origination fee: None
  • Prepayment penalty: None
  • Late fees: None
  • Co-signer release available: No

General repayment options

You can start making payments while in school or defer payments until after you graduate or drop below half-time enrollment. You’ll save the most money by paying off the loan as fast as possible.

  • In-school repayment: This will save you the most money. You’ll be required to make fixed, $25 payments while you’re in school and during your grace period, which is the six to nine months after you graduate or drop below half-time enrollment.
  • Deferred repayment: You won’t be required to make any payments until your grace period ends, but you can choose to make payments if you’d like. Interest will continue accruing while you’re in school, even if you don’t pay. The interest will capitalize, or get added to your principal balance, at the end of your grace period.

Repayment options for struggling borrowers

Throughout a 15- or 20-year loan term, you’re bound to hit some speed bumps, such as layoffs or medical issues. Discover offers relatively generous flexibility if you’re struggling to make payments:

    • Deferment: Postpone loan payments if you’re in school at least half-time, are on active military duty, are doing a medical residency or are serving in a qualified public service organization such as the Peace Corps or AmeriCorps.
    • Forbearance: Postpone loan payments for up to 12 months if you’re unemployed, have a medical disability or have another financial hardship. Interest will still accrue while the loan is postponed.
    • Temporary interest rate reduction: Get a lower interest rate, resulting in a lower monthly payment, for up to 12 months. Payments are subject to a $50 minimum per month.
    • Temporary payment reduction: Pay just the interest on your loan, subject to a $50 minimum, for up to six months. Your loans must be less than 60 days late to qualify.

Discover extras

Discover offers a cash reward equal to 1% of each new student loan for borrowers who earn at least a 3.0 grade point average.

Discover student loans FAQs

  • Can I apply with a co-signer? Yes; you’ll likely get a lower rate if you do
  • Is there a co-signer release option? No
  • Can I qualify if I’ve filed for bankruptcy in the past? Yes; you’re more likely to qualify if the bankruptcy isn’t recent
  • Can I qualify if I’m not attending a Title IV-accredited school? No

Contact Discover

Discover 24/7 student loan specialists: 800-788-3368

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