Are Discover Student Loans a Good Option?

Discover Student Loans previously offered private loans to help cover higher education costs. As of February 1, 2024, Discover is no longer accepting new student loan applications. However, they continue to service existing loans and offer student loan refinancing. This article provides information on their historical offerings, application considerations, and management for current borrowers.

Understanding Discover Student Loan Products

Discover previously offered a range of private student loan products tailored to different educational pursuits. These included loans for undergraduate and graduate studies, as well as specialized loans for specific fields such as MBA programs, health professions, law school, medical residency, and bar exam preparation. These loans were designed to cover up to 100% of school-certified costs.

Eligibility for these loans generally required the applicant to be enrolled at least half-time in a bachelor’s or associate’s degree program, or another eligible program for graduate studies, at an approved school. Borrowers typically needed to be at least 16 years old, and those under 18 usually required a co-signer. Applicants were also expected to maintain satisfactory academic progress as defined by their educational institution.

A significant feature of Discover student loans was the choice between fixed and variable interest rates. Fixed rates remained constant throughout the loan’s life, providing predictable monthly payments, while variable rates could fluctuate based on market indices, potentially leading to lower initial payments but also the risk of increases. Borrowers could benefit from interest rate reductions, such as a 0.25% reduction for enrolling in automatic debit payments. A notable aspect of Discover’s student loan offerings was the absence of various fees, including application fees, origination fees, prepayment penalties, and late payment charges.

The Application Process

The process for obtaining a Discover student loan involved specific steps for information gathering and form completion. Applicants typically provided personal identification details, such as their Social Security Number, date of birth, and current address. Financial information, including income and employment details, was also a standard requirement.

Details about the school, program of study, and the academic period of enrollment were necessary to determine the eligible loan amount. If applying with a co-signer, their personal and financial information was also required, as a creditworthy co-signer could improve the chances of loan approval and potentially secure a lower interest rate. The application process involved a hard credit check, which provided the basis for the loan decision and interest rate offered. Applications were typically submitted online through Discover’s website, focusing on gathering necessary documentation and accurately completing forms.

Managing Your Discover Student Loan

For those with existing Discover student loans, various options are available for ongoing management and repayment. During enrollment, borrowers often have choices for in-school payments, such as making fixed $25 monthly payments or deferring payments entirely while enrolled at least half-time. Following graduation or leaving school, a grace period, typically lasting six months, provides a transition before full repayment begins.

Discover’s standard repayment plans for undergraduate student loans have typically been structured over a 15-year term, with consistent monthly installments. To manage payments conveniently, borrowers can utilize Discover’s online portal to set up auto-debit, which automatically withdraws payments from a designated bank account. This not only streamlines the process but also often qualifies borrowers for an interest rate reduction.

If borrowers face financial challenges, Discover offers several options for temporary payment relief. Deferment allows for a temporary postponement of payments under specific conditions, such as continued enrollment in school at least half-time, active military duty, public service, or medical residency. Interest may continue to accrue during deferment periods. Additionally, programs like Early Repayment Assistance or Hardship Assistance can provide temporary reductions in monthly payments or extensions of the grace period for eligible borrowers experiencing economic hardship. Borrowers can access customer support via phone or online channels to discuss their accounts, explore repayment options, or request assistance.