March 28, 2018

Discover Student Loans Review

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Discover® Student Loans offers no-fee student loan financing. But you will need great credit or a cosigner. Read on to see if Discover is good for you.

5-point scale (the higher, the better)

Pros and Cons

  • 30 Days to decide and accept and 3 day right to cancel period
  • No late fees for missed payments
  • Borrowers can receive 1% cash back for good grades on each newly added loan
  • There are limitations on the types of loans eligible
  • No cosigner release unless you have consolidated loans prior to 2012
  • Lack of repayment times

Bottom Line

Good option as they offer cash back for new loans and no late fees, but don't plan to release a cosigner.

What Discover® Student Loans Offer

Discover® Student Loans offers "no fee student loans" and will cover up to 100% of the cost of attendance at your chosen school. They offer programs for undergrads and grads, as well student loan refinance options.

Undergrad Loans

Discover Student Loans advertises their undergrad loan as a "supplement to federal loans." All over their website, they encourage you to exhaust all other options for financial aid before securing a private loan.

If you qualify, you can borrow up to 100% of the cost of attendance each year; however, it's best used as a "filler" for the money you don't get from federal loans or scholarships.

In order to qualify, you must:

  • Attend school at least half-time
  • Work towards a real degree
  • The school must be able to verify that you are performing well and making progress toward your degree
  • Be at least 16 years old
  • Have good credit or a credit-worthy co-signer

Grad Loans

If you want to take your studies further than an undergrad degree, Discover Student Loans offers options for the following programs:

  • Masters degree
  • MBA
  • Doctorate
  • Law school

Discover breaks the graduate programs down by degree, and each program has its own corresponding interest rates. Generally, those striving for a doctoral or law degree tend to have the lower interest rates.

Refinance/Consolidate Student Loans

Discover Student Loans also offers student loan refinance and consolidation loans. Unlike their standard student loans, though, they have a minimum loan amount of $5,000.

The refinance loan is a good option when you want to consolidate several private loans into one payment or when you want to release a co-signer and the current bank won't allow it.

The refinance loan has the same benefits as their standard student loans. There are no origination fees, processing fees, or prepayment penalties. The only terms Discover offers, however, are 10- or 20-year terms.

Watch Your Federal Loans: If you have federal student loans, use caution before refinancing them. It's wise to discuss your options with the Department of Education first. They may have beneficial repayment options or even forgiveness programs you can use.

If you refinance out of your federal loans into a private loan, you eliminate these options for good.

Who Benefits from Discover Student Loans?

Students who have exhausted all other avenues of financial assistance for college tuition benefit from Discover Student Loans. If you are a good risk, meaning you have good credit or a solid co-signer, they offer rates that compete well with federal student loans. Discover also offers a few benefits you won't find anywhere else.

Reasons Why We Like Discover Student Loans

  • The application process is quick. Like many other student loan providers, the application process is done online and takes around 15 minutes to complete.

  • You won't pay any fees. Not charging any fees is a large benefit for student loan borrowers. Origination fees and processing fees alone can cost several thousand dollars. Discover also doesn't charge late fees on their loans.

  • You can choose between fixed or variable interest rates. You can choose the type of interest rate that suits your ability to pay the best. Variable interest rates could change as often as once per quarter, though. Keep that in mind as you make your choice.

    Compare with other lenders. Shop around with different lenders to see who gives you the best rate. You can get multiple rate quotes with no obligation. Check out some of those top student loan refinance lenders.

  • You can get help if you lose your job. Discover offers several options for borrowers having difficulty making their payments. They offer temporary solutions, including extensions, forbearance, and reduced payment options.

  • You have partial interest payment options. Discover offers borrowers two repayment options. The first requires a $25 minimum monthly payment while you are in school and for six months after you graduate. This helps bring the loan balance down when you enter full repayment. The second works just like a federal student loan. Your monthly payments are deferred until six months after you graduate, at which point you'll then pay principal and interest payments. Deferred payments accrue interest while not in repayment, which gets tacked on the back-end of your loan.

  • You can get rewarded for good grades. Discover offers a one-time reward worth 1% of the principal balance of your loan. You can obtain this by achieving a 3.0 GPA during at least one term during the period covered by your loan. You must claim your reward within six months of the covered term or within six months of the final loan disbursement, whichever comes later.

  • Get help when you need it. Discover has all US-based customer service representatives who are available to help you around-the-clock, 7 days a week.

  • Get help paying for bar exam assistance. If you graduated from law school within the last six months, you can borrow up to $16,000 to prepare for the bar exam.

  • You can save money with auto debit. Setting up automatic payments could reduce your interest rate by 0.25%.

Reasons You May Want to Look Elsewhere

  • You can't get pre-qualified. Many student loan providers provide a pre-qualification, which is only a soft pull on your credit. This gives you the opportunity to compare offers from different lenders. Without that option, you may feel obligated to take the offer Discover provides, at which point they will hit your credit with a hard inquiry.

  • You only have one option for a repayment term. Discover only offers a 15-year term for undergrads and a 20-year term for grads. The longer you borrow money, the more interest you pay. While you can prepay at any time, it stretches out your principal over a longer period than many other programs, costing you more in the end.

  • You won't have a co-signer release option. Many college students require a co-signer on their student loans due to a lack of a credit history. Having the option to release that person after a couple of years of payments is a nice option, though. Discover does not offer this feature. If you want to eliminate a co-signer, you'll have to refinance the loan.

The Application Process

Discover makes the online application process simple. Aside from your standard personal information, you'll need:

  • Your Social Security number
  • Information about your intended school, including the name, program of study, and enrollment dates
  • Information about any financial aid already received
  • Amount of money requested
  • Information about your income, assets, and liabilities

If you intend to use a co-signer, they will need to provide basic identifying information, as well as:

  • Their Social Security number
  • Information about their employment and income
  • Information about their income, assets, and liabilities
  • Amount of money requested

On Discover's website, you can start the process by choosing your chosen school from their pre-populated list. From there, you enter your personal information and submit the application. Discover may ask for income or asset documents, which you can upload online in just a few minutes.

If you are approved, Discover disburses the funds to the school according to the school's required payment dates.

Need to Contact Discover Student Loans? Discover Student Loans' customer service agents are available 24/7 via phone or email. However, they do not have an online chat option like many other student loan lenders have.

You can call Discover Student Loans at 1-800-STUDENT.

Once you accept one of their student loans, they give you the option to email them via your portal after you log in.

How It Compares

Citizens Bank:
The largest difference between Citizens Bank and Discover is the various term options. Discover restricts you to one term. Citizens Bank offers 5-, 10-, and 15-year repayment terms. Citizens Bank does offer a co-signer release option, but not for at least 36 months.

If you want to apply for an independent student loan, Ascent may have what you need. They offer independent and co-signed loans with no origination, processing, or prepayment fees. They also offer a variety of repayment options and plenty of education prior to taking out the loan.

Bottom Line

Discover Student Loans may be a viable option for you if you don't get enough money from federal student aid. Because they don't offer the option to pre-qualify, you may want to exhaust your other options first. Their good student reward and interest payment options do make it a favorable option for borrowers trying to get ahead of their debt before graduation.

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