Although Discover is most known for its reward credit cards, it has made a name for itself in student loans. Discover’s student loans process is fast, easy and convenient with competitive rates and high limits. Further, Discover finances up to 100% of school costs, so borrowers don’t have to seek loans from multiple lenders. The only hang-up is getting approved may be difficult if your credit isn’t established or in good shape. However, applying with a cosigner is an option to boost your chances of getting approved for a Discover student loan. If you’re looking for an easy and dependable way to cover the cost of tuition and school-related expenses, Discover student loans are worth a look.
Discover Student Loans at a glance
| Lender | Min. Loan | Max. Loan | APR | Terms | Key Benefit |
|---|---|---|---|---|---|
| Discover | $1,000 | 100% of attendance cost | Variable rates between 1.24% – 10.99%1 APR, fixed rates between 4.24% – 12.39%1 APR. | 15 years | No origination fees |
1. Lowest APRs shown for Discover Student Loans are available for the most creditworthy applicants for undergraduate loans, and include an interest-only repayment discount and a 0.25% interest rate reduction while enrolled in automatic payments.
What we like about it
A student loan from Discover offers a whole host of benefits for students through undergraduate and graduate studies. First, depending on your creditworthiness, Discover may pay up to 100% of school-certified costs which is great for students who want to avoid the hassle of dealing with multiple lenders. Discover borrowers also benefit from not having to pay origination, application or late payment fees, which is nearly unheard of among competitors. A unique program that Discover offers is awards for good grades throughout college. If you earn at least a 3.0 GPA, then Discover will send a cash reward equal to 1% of the loan covering that academic period.
Additionally, the application process is fast, easy and done completely online. Should you require the assistance of a representative, Discover is well-known for its exceptional customer service from U.S.-based representatives. There are great options like extensions, forbearance and reduced payments for borrowers who fall on financially tough times and have difficulty making payments.
Lastly, Discover offers students different repayment options so borrowers can choose a plan that best fits their needs throughout college and after graduation.
Things to consider
Qualifying for a Discover Student Loans may be difficult for borrowers who have low or limited credit, low or no income or no cosigner available. However, Discover will only make lending decisions based on a hard credit pull.
Another thing to consider is that Discover offers limited loan terms. For undergrads, the loan term is 15 years and for graduate students, the loan term is 20 years. Also, if you use a cosigner for your loan, there isn’t an option to release your cosigner once your credit is built up — you have to keep the cosigner for the duration of your loan or until you refinance with another lender if you choose to do so.
What you need to know
As the cost of higher education continues to increase, more and more students are looking to private student loans, like Discover to help cover the cost of schooling. Discover offers many competitive options, including the option to choose between fixed and variable APR loans. Additionally, both cosigned and non-cosigned loans are available, allowing for more options if you don’t have great credit on your own yet.
Applying is easy and done completely online with basic information from you and your cosigner – if you have one. Once you’re on Discover’s website, you can get the process started by selecting your school from the pre-populated list. After that, all you need to do is enter your personal information along with your cosigner’s information and hit submit. In some cases, Discover may require additional documentation. In this case, you can easily upload them online through the website.
Discover has three repayment options for borrowers to choose from. Student borrowers can make interest-only payments with a 0.35% rate discount or $25 a month while in school. If either of these options don’t work, then the borrower can start making full, monthly payments six months after graduation. Of course, borrowers can opt to make principal payments whenever to avoid piling interest as a way to stay ahead of student loan debt.
Fees and penalties
When it comes to fees and penalties, Discover rates highly as one of the most generous student loan lenders out there. Borrowers who choose Discover Student Loans will not pay for origination fees, application fees or late fees. Avoiding these fees can save borrowers thousands of dollars on their loan, making it a very savvy choice.
Collateral and criteria
Student loans from Discover are offered to students who are enrolled at least part-time in an eligible college or university. You’ll have the opportunity to see if your school is eligible during the application process. You’ll also need to have good credit, anywhere in the mid-600s and up, to be eligible. Or, you can apply with a cosigner who has good credit. Student loans through Discover are unsecured loans so do not require collateral.
The bottom line
A student loan from Discover is a great choice for both undergraduate and graduate students who didn’t receive enough money from federal student aid. That said, it may not be a viable option for borrowers who have lower credit scores and don’t have an available cosigner. It’s also important to keep in mind that there is no option to pre-qualify, so you may want to check other avenues first. Further, Discover’s no-fee policies and competitive interest rates make it a great option for students looking to manage and stay ahead of loan debt.
Discover Student Loans Disclosures
Lowest APRs shown for Discover Student Loans are available for the most creditworthy applicants for undergraduate loans, and include an interest-only repayment discount and Auto Debit Reward. The interest rate ranges represent the lowest and highest interest rates offered on Discover student loans for undergraduate. The fixed interest rate is set at the time of application and does not change during the life of the loan. The variable interest rate is calculated based on the 3-Month LIBOR index plus the applicable margin percentage. For variable interest rate loans, the 3-Month LIBOR is 0.375%% as of July 1, 2020. Discover Student Loans may adjust the rate quarterly on each January 1, April 1, July 1 and October 1 (the “interest rate change date”), based on the 3-Month LIBOR Index, published in the Money Rates section of the Wall Street Journal 15 days prior to the interest rate change date, rounded up to the nearest one-eighth of one percent (0.125% or 0.00125). This may cause the monthly payments to increase, the number of payments to increase or both. Our lowest APR is only available to customers with the best credit and other factors. Your APR will be determined after you apply. It will be based on your credit history, which repayment option you choose and other factors, including your cosigner’s credit history (if applicable). Learn more about Discover Student Loans interest rates.
