Discover Private Student Loans Review
Discover in a Nutshell
Table of contents
As one of the more popular online banking services, Discover gives students the support of a trusted financial institution when they need to pay for school. The company’s student loans are some of the more competitive products on the market, and it shows.
Our Discover review uncovered a lender that cares about its borrowers by providing cash rewards, discounts, and some of the more competitive rates—both fixed and variable—on the market. Additionally, their varied loan tracks, which cover undergraduates, graduate studies, and even specialized education, give you the backing to complete your higher education.
Even better, if you find yourself in need of simplifying your loan repayments and lower your interest rates, Discover is happy to help with great refinancing alternatives. Keep reading our Discover Student Loans review below and see if the company is the right fit for your needs.
Widely known for its credit card services, Discover has since started offering online banking and student loans services. Although it’s better known for its other offerings, the company is one of the largest private student lenders in the US. The Discover card was originally introduced by Sears in 1985, but in the time since the company has expanded its offerings.
Discover Bank was originally established in 1911 as The Greenwood Trust Company in Greenwood, Delaware. After being acquired by Discover Financial Services in 1985, the company grew its offerings to add credit cards, and—after rebranding as Discover Bank in 2000—began offering student loans in 2007.
The company is a member of the FDIC, and in 2018 was ranked as the 29th largest bank in the US by assets, with more than $98 million managed. In addition to providing banking, Discover works to educate its customers, offering a variety of financial tools and resources that help customers make smarter, more informed financial decisions. As a student lender, the company offers a blend of private student loans to cover a variety of educational tracks.
Why Get a Loan from Discover?
During our Discover student loan reviews, we found that the company’s loans are some of the better deals on the market. Although many of their offerings require a co-signer (as their loan eligibility is largely reliant on creditworthiness), Discover more than makes up for it by giving you opportunities to both reduce your interest and lower your principals.
When you get a loan from Discover, you can reduce your interest by 0.25% by enabling automated payments, and you can reduce 1% of the principal for each loan you get (the company exclusively offers single-year loans) by performing well in school and getting a 3.0 GPA. Over the course of your education, that could add up if you need financial aid for several terms.
We were also impressed to see that Discover is happy to work with borrowers who are struggling to pay their loans back. The company offers a generous deferment plan, as you can finish your education before starting your repayments, and undergraduates have a 6-month grace period after graduation, while grad students have a 9-month grace period.
What Student Loans Does Discover Offers?
Our Discover Loans review revealed that most of the company’s loans all cover up to the full cost of your education. All loans are extended only for a single academic year and have a minimum of $1,000 and a wide variety of loans that cover most educational tracks you can choose:
- Undergraduate loans: These loans usually require a cosigner but reward you for being responsible with a 1% reduction in your principal when you complete your term. They also offer variable and fixed rates and have repayment periods of 15 years, available for both bachelor’s and Associate degrees, and let you choose between flat monthly payments, interest-only, or deferment.
- Graduate student loans: Loans for grad students are similar to undergraduate loans, though they offer a slightly longer grace period after you finish school. You can (including specialized tracks) extend the grace period and repayment term and are easier to be approved for without a cosigner. They also feature lower interest rates.
- MBA, Health Professions, and Law loans: These specialized loans offer slightly longer repayment terms of 20 years.
- Residency loans: Designed specifically for medical students during their residency, these offer lower fixed and variable rates, and a 20-year repayment term. They do have limits, set at $18,000 for allopathy, dentistry, optometry, pharmacy, podiatry, and veterinary medicine residencies; and $5,000 for nursing, occupational therapy, physical therapy, and physician assistant tracks.
- Bar exam loans: These loans have amount limits, and a repayment period of 20 years and have a limit of $16,000 and offer lower interest rates.
- Consolidation for students and parents: If you are looking to improve your interest rate or terms, you can bundle your loans into a single payment.
Discover Rates, Terms and Fees for February 2020
|Discover Private Student loans||*Variable Rates||*Fixed Rates||Repayment Terms||Payment Deferment while in school|
|Undergraduate Loans||2.80% - 11.37% APR||4.74% - 12.49% APR||15 years, after deferment period||no payment until 6 months after graduation|
|Graduate Loans||3.74% - 11.37% APR||4.99% - 12.24% APR||20 years, after deferment period||no payment until 9 months after graduation|
|MBA Loans||3.74% - 11.24% APR||4.99% - 11.49% APR||20 years, after deferment period||no payment until 9 months after graduation|
|Health Profession Loans||3.74% - 9.37% APR||4.99% - 9.74% APR||20 years, after deferment period||no payment until 9 months after graduation|
|Law School||3.74% - 9.37% APR||4.99% - 10.24% APR||20 years, after deferment period||no payment until 9 months after graduation|
|Residency||5.97% - 8.37% APR||7.34% - 9.74% APR||15 years, after deferment period||no payment until 9 months after graduation|
|Bar Exam||6.37% - 11.37% APR||7.74% - 12.74% APR||20 years, after deferment period||no payment until 9 months after graduation|
Student Loan Consolidation with Discover
If you need to consolidate your existing loans, you can do it directly through Discover. Consolidating with Discover gives you significantly lower rates, as well as the ability to get your loan without a cosigner. The company lets you consolidate up to the aggregate amount of your loans, with a minimum of $5,000. Our Discover loans review did reveal that there are some limitations to the loans you can consolidate:
- Loans for pre-college education
- Postgraduate loans
- Loans for nonqualified expenses
- Loans taken while you were enrolled less than half-time
- Loans originated or serviced outside the US
Loan Consolidation Rates, Terms and Fees for February 2020
|*Variable Rates||3.99% - 7.24% APR|
3.99% - 6.99% APR
|Max. Loan Amounts||$150.000|
|Payment Deferment while in school||starting 30 days after the loan is funded|
When you take a Discover student loan, you can choose from three repayment options while in school. You can choose from the following:
- Interest-only payments: If you want to avoid your principal growing after graduation, you can sign up to pay the monthly interest that accrues while in school. This option also gives you a 0.35% discount in your interest rate when your grace period ends.
- Fixed payments: You can sign up to pay a small fixed amount every month ($25) to start chipping away at your principal and give yourself a smaller debt when you graduate.
- Deferred payments: If you can’t afford to start repaying your loan, you can defer your payment until six months after your enrolment drops below half time. Keep in mind your loan will still accrue interest during this period.
One thing that stood out in our Discover review is that the company is very easy to reach. If you have any questions, you can contact Discover via email or phone 24/7. Additionally, they offer a great section on planning and preparing for college, as well as educational materials on student loans themselves.
Discover Pros and Cons
- Cover all of your education with full cost of education loans
- Reduce your principal with good grades, with 1% back when you post a 3.0 GPA
- Get a 0.25% reduction in your interest by enabling automated payments
- Avoid paying more for your loan thanks to 0 fees
- Rest easy if you’re struggling financially thanks to generous assistance programs including forbearance
- Find the perfect loan option for you with multiple specialized tracks
- Consolidate both your federal and private loans at lower interest rates
- There is little flexibility due to single repayment terms per loan
- You can only apply for 1-year loans
- Most undergraduate loans will probably require a cosigner
How to Apply for a Discover Student Loan
To apply for a Discover loan, make sure you meet the following requirements:
- Be enrolled at least half-time (and full-time in some cases) at an eligible school
- Be making satisfactory progress as your school defines it
- Be a US citizen or permanent resident (international students can apply, but require a cosigner that meets one of those criteria)
- Be 16 years or older
- Pass a credit check
You can apply directly from the company’s website, and after entering your information, desired loan amount, and preferred payment options you’ll receive your approval notice shortly. The company may contact you to request additional documentation or information to complete your application.
Overall, our Discover student loans review shows a company that offers variety and some of the most competitive rates on the market. We were impressed with Discover’s commitment to helping students instead of hindering them and were happy to see such a variety of assistance programs for struggling borrowers.
Additionally, perks like interest rate reductions and principal discounts encourage you to both be responsible and pursue your education with added zeal. With a great blend of options and interest rates, Discover is one of the top choices for student loans, regardless of the level you’re currently applying for.