Does Discover Refinance Student Loans?

Student loan refinancing offers borrowers an opportunity to reduce their interest rates, lower monthly payments, or adjust repayment terms. This process involves taking out a new loan to pay off existing student loans, consolidating them into a single new loan with new conditions. The primary aim of refinancing is to achieve more favorable terms that better align with a borrower’s current financial situation and long-term goals.

Discover Student Loan Refinancing Availability

Discover Financial Services no longer originates new private student loans or offers student loan refinancing directly. Discover ceased accepting new student loan applications, and existing Discover student loans are being transferred to a new servicer and sold. Borrowers with existing Discover student loans can still pursue refinancing through other private lenders, potentially securing different rates and terms based on their current creditworthiness.

Eligibility and Application Preparation

To refinance student loans, borrowers must meet specific eligibility criteria. A strong credit history and score are required, with many lenders looking for a credit score of at least 700 for competitive rates. Lenders also assess income stability and employment verification to ensure the borrower can meet new loan obligations.

Both private and federal student loans are eligible for refinancing, though refinancing federal loans means losing access to federal benefits like income-driven repayment plans or loan forgiveness programs. Lenders require borrowers to be U.S. citizens or permanent residents. If a borrower does not meet credit or income requirements independently, applying with a creditworthy co-signer can improve approval chances and potentially secure a lower interest rate.

Before applying, gather specific documents and information. This includes personal identification (e.g., Social Security number) and proof of income (e.g., pay stubs, tax returns). Statements for existing student loans you intend to refinance are also needed. Prepare employment verification, educational history, and co-signer’s financial details if applicable.

Submitting Your Application

After compiling necessary information and documents, submit the refinancing application to a chosen lender. Most lenders offer an online application portal for data entry and document uploads. Some lenders provide prequalification, allowing you to check potential rates without impacting your credit score via a soft inquiry. This step helps compare offers before a formal application and hard credit pull.

After completing online forms and attaching documentation, the application is formally submitted, often requiring an e-signature. Lenders provide a confirmation message and outline processing timelines, with some decisions made within 48 hours. During review, the lender may contact the applicant for additional information. Application status updates are typically managed through an online portal or email.

Refinance Loan Options

When refinancing student loans, borrowers encounter various loan options. A primary choice involves the type of interest rate: fixed or variable. Fixed rates remain constant throughout the loan term, providing predictable monthly payments, while variable rates can fluctuate with market conditions, potentially leading to lower initial payments but also future increases. The actual interest rate offered is influenced by the borrower’s creditworthiness, income, and chosen repayment term.

Lenders offer a range of repayment terms, spanning 5 to 20 years, allowing borrowers to select a term that balances lower monthly payments with total interest paid. Shorter terms result in higher monthly payments but less interest accrued, while longer terms offer lower monthly payments but increase the overall loan cost. Some lenders also offer a co-signer release option, allowing the co-signer to be removed after a certain number of on-time payments and meeting other eligibility criteria. Not all lenders offer this feature.