Discover Student Loans Review

Learn all about the pros and cons of Discover undergraduate and graduate student loans, refinancing, application process, interest rates and repayment plans from here.

Updated by Gowtham Ramesh on 23rd August 2019

The increase in the expenses for education has increased alarmingly for the past few years. It results in students opting for loans to pay for their higher education expenditures. There are a lot of students who have moved towards private education loans to cover the expenses and one among the many big private lenders is the Discover Bank. It offers competing choices for private student loans.

The financial crisis of 2008 made many private student loan providers to move out of the market. Discover hence started to offer its private loans to a wider reach. As a result, it grew to become one of the biggest lenders in the industry.

It provides loans for undergraduate and graduate students and also offers consolidation of loans with a decent interest rate, term, and limits.


List of contents


Overview - Discover Student Loans

Discover College Loans are offered by Discover Bank. Most people know Discover from its popular credit card since Discover Bank is one of the biggest student loan providers in the market.

It grants private students with loan choices for various types of students in Undergraduate, Graduate, MBA, Law, Residency and Bar Exam levels. The total amount of the loan is limited based on the program you have opted for.

 

Discover student loans

The loan terms provided to the borrowers go up to 20 years. If you get enrolled in automatic payments, you get a 0.25% rate reduction.

The minimum amount for borrowing is $1,000 and you can borrow up to 100% of the school-certified cost of attendance which includes books, tuition, housing and more. The amount is certified with school so that a student doesn't borrow more than what's required. 

Let us discuss each type of Discover Student Loan in detail.


Undergraduate Student Loans

Discover offers private loans to undergraduate students who are listed as qualified and have attended accredited college or university for at least part-time. It has various determinants to be considered and noted with regards to undergraduate student loans such as interest rate, repayment terms, and fees.

Interest Rates

The loans that are issued by the Discover are based on the creditworthiness of the borrowers and other several factors, where the applicants who have higher competitive interest rates can qualify for borrowers. The variable rates range from 4.12% - 11.87% APR. The fixed rates range from 5.49% - 12.99% APR.

The lower rate consists of interest only repayment discount which is granted as an award for Auto Debit program where a reduction of 0.25% point is applicable.

The variable interest rates are lesser than the fixed rates at times but could be subjected to irregular fluctuations when the market fluctuates. The fixed rates start much lower for the most creditworthy applicants and can go up to 12.99% APR for the lower qualified borrowers. If you opt for a variable rate Discover loans then you need to be aware of the fluctuations.

Fees, Loan Limits and Repayment Options

Undergraduate student loans usually have a 15-year repayment term. You do not have any fees on the loans such as the fees for application, origination, prepayment penalties, or late fees.

Repayment options - Discover student loans for undergraduate students have 3 options which are mentioned below - 

1 - Fixed payment plan 

It needs a monthly payment of $25 when you are in school. The remaining principal and interest payments are made after school ends.

2 - Deferred payment 

It does not require any payments for six months until or when the borrowers leave from part-time attending status or graduates.

3 - Interest-only 

It permits borrowers to pay any of the interest as shortly because monthly payment of interest is made even when you are in school.


Graduate Student Loans

Discover offers private loans to Graduate students who are listed at an accredited college or university for at least part-time. The different interest rates, loan limits, fee details, and repayment options are as given below.

Interest rate

The interest rate which is offered by the graduate students can be variable or fixed. The variable interest rates start around 4.12% and can go up to 11.87% APR while the fixed interest rates start around 5.49% and can go up to 12.99% APR

Fees, Loan limits and Repayment options

Graduate student loans usually have a 20-year repayment term. You do not have any fees on the loans such as the fees for application, origination, prepayment penalties, late fees, or funding fees.

The loan limits are based on the school certification total cost and the minimum amount is set at $,1000.

Repayment options - Discover has 3 options for graduate students which are mentioned below.

1 - Fixed payment plan

It needs a monthly payment of $25 when you are in school. The remaining principal and interest payments are made after school ends.

2 - Deferred payment

It does not require any payments for six months until or when the borrowers leave from part-time attending status or graduates.

3 - Interest-only

It permits borrowers to pay any of the interest as shortly because monthly payment of interest is made even when you are in school.


Residency Loans

Looking into medical schools, loans are offered to medical students while they are in residency programs. Even though most of these loan programs pay, they fail to pay for everything including the housing and other living costs. These Residency Loans can help them with all the uncovered cost of residency, internship, relocation, and exam review.

There are some limitations to residency loans when compared with other products. You can only borrow $18,000 for Allopathy, Dentistry, Optometry, Osteopathy, Pharmacy, Podiatry and Veterinary Medicine, and $5,000 for Nursing, Occupational Therapy, Physical Therapy, and Physician Assistant.

These loans generally do not need a co-signer if you have a good credit history. In case you do not, you will need a co-signer. During residency, you can defer the payments for a period of 5 years. You can also take the option of making $25 per month at this time.

The repayment period of these loans is up to 20-years. The variable interest rates start around 5.87% - 8.87 % APR while the fixed interest rates start around 6.99% - 9.99% APR. You can also avail of a reduction of 0.25% point when you opt for an auto-debit program.

Pros and cons of Discover private student loans for residency

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It might be possible to avoid taking loans while in the residency. Residency salaries may not be much but they should be covering a huge part of the expenses which are associated with the residency.

Looking for negotiating for a relocation package will be costly and might leave you in debt. If you are qualified for the relocation package that does not mean that you should turn to loans too quick. Look for the options and opening a 0% APR credit card.

Use the credit card to finance the expenses for a few months and then work towards repaying it. Residents should also consider refinancing their student loans. The offers and perks to residents and doctors may help them in saving a lot of money.


Bar Exam Loans

In the case of law students, situations are tough with living expenses and other costs stacking up during the study. It can be made simple by the bar exam loans. It helps with their bar exam cost at a low-interest rate.

It allows you to take $16,000 for bar exam preparation. It is available for current law students and it has a grace period that can be extended up to 6 months after graduation.

This loan may not need a cosigner if you have a good credit history. Otherwise, you will require a cosigner with a good credit history.

The loan has a repayment period of 20 years.

The variable interest rate is around 6.27% - 11.87 % APR and the fixed rate of interest is around 7.39% - 12.99% APR. You can avail of the reduction of 0.25% point when you enroll in an auto-debit program.


Looking for alternatives? Look at Top 10 Private student loan lenders 


MBA Loans

In the case of MBA students, a special loan is offered to cover all the costs of attendance.

It allows you to take 100% of your school-certified cost of attendance and the minimum amount for the loan is $1,000. The money will be delivered directly to your school. You get cash reward on your Discover loans when you score 3.0 GPA or more. The maximum term provided to the loan is 20 years.

They offer variable and fixed interest rates. The variable rate starts around 4.12% and can go up to 11.87% APR. The fixed rate of interest starts around 5.49% - 12.99% APR. You get a reduction of 0.25% point when you enroll yourself in the auto-debit program. Variable rates might change every quarterly in the span of the loan life.


Health Professionals Loan

Discover offers '0' fees for private student loans for students who are graduating in Allopathy, Osteopathy, Dentistry, Nursing, Pharmacy, Physician Assistant, Occupational Therapy, Optometry, Podiatry, or Veterinary Medicine.

It offers to pay 100% of the cost of attendance for the certification. The minimum amount of loan is set at $1,000. The money is sent directly to the school so you cannot borrow more than what you need. A co-signer might be needed in case you have a low credit score or no history of credit. You can add a creditworthy cosigner.

It offers variable and fixed interest rates. The variable interest rates start around 4.12% - 9.87% APR. The fixed interest rates start around 5.49% - 10.99% APR. You also get a 0.25% point reduction if you get listed in the auto-debit program. You get a cash reward of 1% of your loan if you have a GPA of 3.0 or more. The maximum term provided to the loan is 20 years.


Law Loans

Law Loans is a special loan program made for law students in order to help them achieve their degree without financial stress.

It offers to pay 100% of the cost of attendance for the certification. The minimum amount of loan is set at $1,000. The money is sent directly to the school so you cannot borrow more than what you need. A co-signer might be needed in case you have a low credit score or no history of credit. You can add a creditworthy cosigner. By applying with a creditworthy cosigner, you may get easier loan approval and a lower rate of interest.

It offers variable and fixed interest rates. The maximum repayment term is 20-years. The variable interest rates start around 4.12% - 9.87% APR. The fixed interest rates start around 5.49% - 10.99% APR. You also get a 0.25% point reduction if you get listed in the auto-debit program. You get a cash reward of 1% of your loan if you have a GPA of 3.0 or more.


Trouble paying student loans?

The company wants its borrowers to succeed and repay their student loans. In order to so, they have created a number of programs to help them to avoid default. Further, they have offered six to nine months of deferment in school programs and the following are some of the plans of Discover offers.

1. Early repayment help 

A three-month extension of your grace period.

2. Payment Extension 

If you fell into delinquency, Discover can revive your loans if you create three consecutive payments in ninety days.

3. Reduced Payments 

Reduce your payments to simply the interest quantity for 6 months.

4. Forbearance 

Payments stop for 6 months, however, interest continues to accrue.

5. Hardship 

Discover reduces your charge per unit for 6 months.


Worried about college fee? Learn about student loans to finance your education


Loan Consolidation Program

Discover offers refinancing loans under its consolidation program for equipped borrowers. You can refinance federal and private education loans into one new loan. Refinancing is the process of terminating the old private loans and/or federal loans to a new loan with a lower interest rate along with favorable repayment periods.

Description Rates and Percentage
Fixed Rates 5.74% – 8.49%
Variable Rates 4.74% – 7.74%
Loan Terms 10 or 20 years
Loan Amounts $5,000 – $150,000

Consolidation and refinancing can be a good option when you are looking to make a single payment on the student's loan with the option to get lower monthly payments. You are most likely to get it done once they have started to work in a full-time job with an approved credit score and records of income.

Interest Rate

Discover private student consolidation have variable interest rates starting around 4.62% - 7.62% APR. The fixed interest rates of loan for a 10-year repayment period are around 5.74% - 8.49% while for the 20-year period they start around 5.99% - 8.49% APR.

Fees, Loan limits and Repayment Options

The repayment term for consolidation of a student loan under Discover loan is either 10 years or 20 years. The consolidation/refinancing loan does not have any fee for origination, application or prepayment.

It has a limit of $150,000 on the loan.

The consolidation of loans with Discovery is open for students who are graduated or leaving the degree program. The only option of repayment that is available is full principal and interest which gets started after 30 days from the time of the loan is financed.


Discover student loans review

Refinancing student loans with Discover is a good option if they're financially well. Due to large repayment options offered to the borrowers such as reducing payments, it becomes an obvious choice for student loan borrowers. According to its customers, the loan and application process is very easy and hassle-free. 

It has received an A+ rating from the Better Business Bureau and received around 209 complaints from the Consumer Financial Protection Bureau relating to receiving a loan, servicer problems and more in 2017. Discover provided sufficient help and responses to address the issues and closed the same.  

The benefits and drawbacks of Discover student loans are given here - 

Pros of Discover student loans

  • The borrower is able to receive 100% of their school-certified cost of attendance without having to pay any fees

  • Students who have a good grade with 3.0 GPA or higher are able to get a cash reward for 1% of new undergraduate or graduate loan which they have borrowed

  • They have good customer service and no origination fee 

  • They also have pride in having only U.S. based student loan expert

  • The application process is fairly simple and can be completed within 15 mins

Cons of Discover student loans

  • The significant downside of the loans is having the minimum numbers of repayment periods provided to borrowers

  • Undergraduate borrowers usually have a 15-year loan term, indifferent to the amount borrowed

  • Graduate borrowers usually have a 20-year term

  • Consolidation offers 10 or 20-years of the repayment period

  • It doesn't provide a qualification criteria


How to apply for Discover student loans?

The application for a Discovery student loan can be done online and is quite simple. You need to give your information about the current loans along with your income, residence, social security number, and date of birth.

After getting this information through the application, it will process it and review it to make a decision within a few days. The loan fund for undergraduate and graduate students are paid to the school directly. In consolidation, the loan is processed and sent to the borrower's current student loan servicers in order to make payoffs.

If you are trying to be a co-signer on behalf of your child then you can look and complete the application by yourself first or you can start with the cosigner application. If the student fills the application form first, then Discover will send them a key code of cosigner where it can be used to start the cosigner application.

In order to complete the application, you will need your social security number, employer information and the financial information where it consists of rent or mortgage payments and the permanent address. The website will make you enter the information and you can receive a credit result within 15 minutes even lesser