In the private student loan marketplace, Discover Bank provides some of the most tried-and-true options, including loans for undergraduate, graduate, and multiple pre-professional programs.
Discover also offers competitive interest rates and some of the most flexible repayment options of any private lender. And there’s one bonus that makes Discover stand out: borrowers get cash rewards for good grades.
What’s Ahead:
Pros & Cons of Discover Student Loans
Pros
- No loan fees — Discover doesn’t charge the fees that can ratchet up the cost of other servicers’ loans, like origination, application, and late fees. They don’t even charge prepayment penalties.
- Multiple repayment options — Student loans from Discover have deferment and forbearance extensions, and eased repayment options for borrowers experiencing economic hardship. This kind of flexibility is rare for private lenders.
- Large loan limits — With many loans Discover offers, including undergraduate and graduate loans, you can borrow up to the full cost of your education. However, there are aggregate limits for all Discover loans; Discover makes sure you don’t borrow more than you need, and you may not be able to borrow above a certain maximum.
Cons
- Cosigners can’t be released — Unlike several private lenders, Discover keeps cosigners on the hook for repayment responsibility until the loan is fully repaid. If your loan is supported by a cosigner, this is important to keep in mind.
- Narrow loan terms — While some lenders offer a range of short and long repayment term options, Discover repayment terms are limited to 15 or 20 years. This means you could potentially accumulate more interest.
- No prequalification process — With prequalification, you can check if you qualify for a loan without going through a hard credit check. Discover requires the hard credit check, which “dings” your credit temporarily.
Read more: Soft Pull vs. Hard Pull – How Each Affects Your Credit
Types of Student Loans Discover Offers
Undergraduate Programs
If you’re enrolled at least half-time in an associate’s or bachelor’s degree program, Discover can help you out with costs. One unique feature of Discover’s undergraduate loans is the multi-year option, where you can pre-qualify to borrow loans for future semesters at the same school and in the same degree program. Since most Bachelor’s degree programs take at least four years, this could save you a ton of time.
Freshmen are also eligible for extra good-grade perks. In addition to the 1% cash reward Discover offers all its borrowers for 3.0 GPAs or higher, undergraduate freshmen can get an additional 1% of their loan amount as a cash reward.
- APRs: Fixed: 5.49%–13.99%; Variable: 2.99%–12.59%
- Loan amounts: Minimum $1,000, maximum up to 100% of cost of attendance (including tuition, room, board, and books) minus other financial aid
- Loan terms: 15 years
Graduate Programs (Master’s and PhD Degrees)
These loans are for students enrolled at least half-time in eligible master’s or PhD programs in a range of subjects. Eligibility may depend on a credit check, but qualified borrowers can take out up to 100% of their cost of attendance, which can be substantial for graduate school.
- APRs: Fixed: 5.49%–14.99%; Variable: 3.99%–13.99%
- Loan amounts: Minimum $1,000, maximum up to 100% of cost of attendance (including tuition, room, board, and books) minus other financial aid
- Loan terms: 20 years
MBA Programs
Like other graduate programs, business school can be pricey; fortunately, it has its own Discover loan options. Eligible borrowers should be enrolled at least half-time in a business school program leading to an MBA.
- APRs: Fixed: 5.49%–11.99%; Variable: 4.24%–10.99%
- Loan amounts: Minimum $1,000, maximum up to 100% of cost of attendance (including tuition, room, board, and books) minus other financial aid
- Loan terms: 20 years
Medical School
Discover supports medical students in these specialties: allopathy, dentistry, nursing, occupational therapy, optometry, osteopathy, pharmacy, physical therapy, physician assistant, podiatry, and veterinary medicine. If you’re in an eligible program for a specialty on this list, you may qualify.
- APRs: Fixed: 5.49%–9.99%; Variable: 3.99%–8.59%
- Loan amounts: Minimum $1,000, maximum up to 100% of cost of attendance (including tuition, room, board, and books) minus other financial aid
- Loan terms: 20 years
Medical Residency and Relocation
These loans help cover the costs of post-grad medical residencies and internships, including moving costs. The eligible amounts differ based on the specific programs, but a variety of graduate health profession programs are included, as are veterinary and dental residencies.
- APRs: Fixed: 5.99%–8.99%; Variable: 4.49%–7.24%
- Loan amounts: $1,000 to $18,000 for allopathy, dentistry, optometry, osteopathy, pharmacy, podiatry, and veterinary medicine programs. $1,000 to $5,000 for nursing, occupational therapy, physical therapy and physician assistant programs.
- Loan terms: 20 years
Law School
Students enrolled at least half-time in a degree-granting law school graduate program are eligible to borrow up to 100% of their school costs for each year of school.
- APRs: Fixed: 5.49%–13.99%; Variable: 3.99%–12.59%
- Loan amounts: Minimum $1,000, maximum up to 100% of cost of attendance (including tuition, room, board, and books) minus other financial aid
- Loan terms: 20 years
Bar Exam Expenses for Law Students
Recent law school grads, or students in their final year of law school, are eligible for this loan that gives them resources and time to study for the all-important bar exam.
- APRs: Fixed: 6.49%–13.99%; Variable: 4.99%–12.99%
- Loan amounts: $1,000 to $16,000
- Loan terms: 20 years
Parent Student Loans
For students whose parents are helping out with their education, Discover has parent-specific private loans with competitive terms. Parent loans can cover either undergraduate or graduate student costs.
- APRs: Fixed: 9.49%–14.49%; Variable: 7.99%–13.49%
- Loan amounts: Minimum $1,000, maximum up to 100% of cost of attendance (including tuition, room, board, and books) minus other financial aid
- Loan terms: 15 years
Consolidation Loans
Discover also offers private consolidation loans. Technically, these are refinanced loans rather than consolidated loans, but you still get a potential lower monthly payment and a simplified payback process.
Read more: Student Loan Consolidation and Refinancing Guide
Borrowers who choose this option should be aware Discover has longer payback terms for refinanced loans — 10-year or 20-year terms—compared to most lenders. You might make smaller monthly payments, but at the expense of racking up more interest.
- APRs: Fixed: 4.99%–9.49%; Variable: 3.99%–7.99%
- Loan amounts: Minimum $5,000; maximum up to the aggregate amount of your loan debt
- Loan terms: 10 or 20 years
Eligibility
To apply for a Discover loan, you must:
- Be enrolled at least half-time and on track towards a degree
- Be making “satisfactory academic progress” according to your school
- Pass a credit check — as with most private loans, your credit rating helps determine the interest rate you can get
- Be a U.S. citizen, permanent resident, or international student with a citizen/resident cosigner
- Be 16 years of age or older
In many cases, especially with undergraduate loans, you’ll need a cosigner. Make sure your cosigner is in it for the long haul, since Discover requires cosigners to keep their name on the loan until it’s paid.
Read more: What Does Being a Cosigner Really Mean?
Interest Rates
Discover provides a range of interest rates competitive with the industry average for private student loans, though on the higher end of the spectrum.
Borrowers can choose between fixed and variable rates. Fixed rates stay the same over the life of the loan. Variable rates may rise or fall within a predetermined range depending on the market.
You’re eligible for lower interest rates if you or your cosigner have good credit (think high 600s or above). Rates also vary based on the amount of the loan and the length of the term.
Perks and Benefits of Discover Student Loans
Rewards for Good Grades
Discover wants you to do well! As long as your GPA is 3.0 or higher for the year, you’ll get a 1% cash reward for each loan. The reward applies annually if you take out a loan each year. And you can spend the extra cash any way you want.
No Fees
You don’t pay application or late fees — every payment you make goes toward the loan.
Auto Debit Rewards
For enrolling in automatic payment during your repayment period you’ll get a 0.25% reduction on your interest rate.
Repayment Terms
Private loans are known for having less flexible repayment terms than federal loans, but Discover is one exception. The bank makes multiple forms of repayment assistance available to borrowers, including payment extensions and reduced payments as needed.
Interest-Only or Fixed Plans
For in-school repayment you can choose an interest-only plan or a fixed plan. On the interest-only plan you make payments on the interest but not the principal while in school. You’re rewarded with a 0.35% interest rate discount.
The fixed plan requires monthly payments of $25, saving you money on interest later. Those who want to pay early can do so — there’s no prepayment penalty.
Deferment
Deferment lets you delay payments while in school and during your six-month grace period. This option accumulates more interest than the in-school repayment plans.
You can defer for longer periods of time during a medical residency, active military duty or qualifying public service.
Forbearance
Forbearance gives you a chance to postpone loan payments for up to 12 months during times of financial hardship. As with deferment, interest continues to accrue.
For borrowers struggling to make payments, Discover has a few more choices beyond forbearance:
- A temporary interest rate reduction gives you a lower interest rate and payment (a $50 monthly minimum) for up to six months.
- A temporary payment reduction allows you to pay down the interest only (a $50 monthly minimum) for up to six months. To get this reduction you should be less than 60 days behind on payments.
- Early repayment assistance lets you postpone payments for three months (within the first three months of your repayment period).
- Payment extension is for people who are at least 60 days behind on their loan payments — if you make three minimum monthly payments within 90 days, your loan will be brought back to “current” status.
Alternatives to Discover Student Loans
Discover isn’t the only private lender option for students out there. Here’s how Discover stacks up against some of the competition.
Earnest
Best for: Those who want the most flexibility in their loan.
Earnest offers both original loans and refinancing. One standout feature of Earnest student loans is that you can set your own repayment schedule (within limits). Repayment options include an extended term 30-year repayment period, if you choose.
Earnest also gives you the option to skip one payment a year, which could be helpful through extra-tight financial periods.
Like Discover, Earnest lets borrowers choose between fixed and variable interest rates. You can even switch between variable and fixed rates without fees, though Earnest does a hard credit check each time you switch.
Eligibility
- Pass a credit check
- Be at least 18 years of age
- Be a U.S. citizen or permanent resident
- Your debt must be from a Title IV accredited college or university
- Debt must be for a completed degree, a degree estimated to complete the next semester, or an incomplete bachelor’s or associate’s degree
Perks & Benefits
- Set your monthly payment
- Skip one payment a year
- Swap between fixed and variable interest rates
See loan details/apply or read our full Earnest review.
SoFi
Best for: Those looking for the best variable rate.
SoFi offers student loan refinancing with fixed rates and variable rates available. Rates are 3.99% - 8.24% APR (including auto-pay discount of 0.25%), which is lower than the variable rate limits for some Discover loans. Like Earnest, you can choose your own repayment schedule.
SoFi borrowers can also take out original loans up to the cost of their education, and unlike Discover, SoFi doesn’t have aggregate limits on its loans.
Repayment terms are flexible and relatively brief, ranging from 5 to 20 years. And SoFi does offer cosigner release after two years of on-time payments.
Eligibility
- Be a U.S. citizen of legal age
- Be employed or have an offer of employment to start in the next 90 days
- Have graduated from an eligible Title IV accredited university or graduate program
- Have at least $5,000 in student loans to refinance (federal or private)
Perks & Benefits
- Application is fast, easy, and all online
- No prepayment penalties
- No hidden fees
See loan details/apply or read our full SoFi review.
Credible
Best for: Those who want to see all their loan options in one place.
Credible is a loan aggregator, meaning they show you all the loans you can qualify for in one place. Your rates will vary by lender, but you can choose to have Credible show you the lowest rate first.
Depending on your loan and your credit eligibility, Credible loans may have higher fixed interest rates than some Discover loans. Credible does offer prequalification, however, so checking your rates won’t affect your credit score.
And repayment terms are flexible, starting at just five years.
Eligibility
- Varies by lender
Perks & Benefits
- Pre-qualification process is totally free and takes about two minutes
- No hard pull on your credit
See details/apply or read our full Credible review.
Credible Credit Disclosure - To check the rates and terms you qualify for, Credible or our partner lender(s) conduct a soft credit pull that will not affect your credit score. However, when you apply for credit, your full credit report from one or more consumer reporting agencies will be requested, which is considered a hard credit pull and will affect your credit.LendingTree
Best for: Those with limited credit.
LendingTree is also a loan aggregator, so your rates will vary by the lender. Many lenders accept candidates with limited credit, whether you’re consolidating, refinancing, or borrowing a loan for the first time.
Most lenders on LendingTree offer a wider range of loan terms than Discover does; your term could be anywhere from 5 to 15 years and beyond. Lenders may also have a variety of repayment options, from deferral to immediate repayment if you don’t want to accumulate interest.
Eligibility
- Must apply your loan to an associate’s degree, bachelor’s degree, master’s degree, or PhD
Perks & Benefits
- Fast and easy application
- Those with little to no credit may apply
See details/apply or read our full LendingTree review.
Summary
Discover products are worth a serious look if you’re in the market for private student loans. The company offers all the basics, but its grade rewards and generous repayment options set Discover apart.
Featured image: TierneyMJ/Shutterstock.com
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