Discover Private Student Loan Review
About Discover Private Student Loans
Discover Bank founded in 1911 is currently a subsidiary of Discover Financial Services. Discover Bank launched Discover Student Loans in 2007. Discover Bank backs its student loan and refinance programs with its extensive resources. The bank is a subsidiary of a major global financial enterprise- Discover Financial Services- which famously owns the Discover Card payments system. In 2010, Discover Bank acquired The Student Loan Corporation; that development expanded the student loan capacity and indicated a strong commitment to working with student borrowers and their families.
Discover Bank has internal resources and a more than one-hundred-year history of successful operations. The Bank’s lending philosophy promotes responsible student lending. Discover urges applicants to explore other and more cost-effective means of education finance. Discover urges students and parents to thoroughly explore non-repayable forms of aid such as education grants and scholarships.
When students and parents must borrow, Discover recommends exhausting public resources like federal and state government and government-backed loans. While the policy permits borrowing up to one hundred percent of the certifiable school costs up to the overall loan limit of $150,000. The goals of responsible borrowing and lowering student costs are commendable.
Discover has a system of rewards and incentives that apply to all loan and refinanced loans. Students that achieve high grade point averages can apply for a cash award. In the Cash Reward for Good Grades program. Borrowers can get a 0.25 percent reduction for using automatic payments. Discover does not charge origination fees. As the following Discover Private Student Loan Review describes, Discover Bank offers advantages for borrowers and graduates seeking flexible refinancing.
What types of student loans does Discover offer?
Discover works with US citizens and permanent residents. The Bank offers its loan programs in all states to schools qualified to receive federal student loans.
Undergraduate Loans can cover all the school-certified costs of education subject to an overall minimum of $5,000 and an overall limit of $150,000. Borrowers must be 18 years of age, pass a credit check, and a sufficient credit history. There is no minimum income requirement; Discover assesses the applicant’s current and future ability to pay the amounts borrowed.
Graduate School Loans
- Graduate -for graduate level education of all types
- MBA loans specifically for attendance at graduate schools of business.
- Health Professions loans for medical and related professional education
- Law school financing for Juris Doctor or LL.B
Refinancing existing loans including private, state, and federal loans. Borrowers can reduce monthly payments, get better interest rates, and pay with a single monthly payment.
How does it work?
Discover Bank offers private student loans and parent loans for students. Borrowers can finance undergraduate education, graduate education, and professional school attendance for Health professions, law, and business (MBA). Discover has financing for transitions for law (Bar Exam) and health professions (residency, fellowships).
The loan process is an application, review, and approval decision. Co-signers are not required; Discover advises that a co-signer can increase chances for approval and for a lower interest rate after approval. The bank does not estimate the terms and interest rates. The review process is a hard credit check and confirmation of all details of background, employment, and assets. Rather than a preliminary estimate of rates and payments, applicants get the firm offer of financing based on a full credit check.
The review process is thorough and not as fast as typical student loan providers. The estimated time for completion of the application ranges from forty-five to sixty days. Students and their families must apply with Discover early to meet deadlines for enrollment and payment of tuition and fees. Discover Student Loans disburses all loan proceeds to the school that the borrower or borrower’s child attends.
College graduates can refinance federal and private student loans to achieve lower monthly payments and the convenience of a single manageable monthly payment. Discover works with non-grads and students, and they too can refinance to get better terms.
- Undergraduate Student Loans start with a simple application process, review, and decision. The bank does not use a soft credit check, and the hard check can affect credit scores. Cosigners are not required and can improve the chances of approval and possible lower the interest rates and monthly payments.
- Graduate Student Loans have a simple application and review process with a hard credit check. Graduate loans may cover all certified school expenses up to the overall limit for loans from Discover. The bank has separate rate structures for professional education.
Discover does not publish a firm cutoff score for approval. The process uses a hard credit check and a balancing of the overall situation of assets, income, debt, and creditworthiness. A credit score in the range of 680 or higher would be acceptable for a wide range of similar credit transactions with favorable rates. Student loans have additional factors than typical commercial or credit transactions. The student borrower has expectations for income based on achieving an undergraduate degree, graduate degree, or professional degree.
Credit scores are not the sole criterion for making a loan decision. When the student borrower has a co-signer, then the co-signer’s creditworthiness, income, and balance of debt to assets is a factor. Discover does not permit substitution of the student borrower for the co-signer except as a refinance transaction.
Discover Bank enjoys a positive reputation as a company that offers flexible repayment terms. Discover does not charge late fees. Borrowers can use flexibility to navigate periods when they need to reduce monthly expenses.
Discover provides a higher level of borrower support than other lenders. Borrowers can work with loan specialists before and during the loan process. Discover urges borrowers to use the federal student resources, apply through FAFSA, seek grants and scholarships. Discover suggests that best way to avoid excessive student debt is to take advantage of non-repayable student financial assistance.
Discover stands out among student loan businesses for its flexibility and personal service. Student loan repayments are necessarily spread over long periods. Discover offers ten- and twenty-year repayment plans. Interest rates reflect the borrower’s creditworthiness. Students and borrowers can elect fixed rate loans or variable rates.
Consolidation loans currently offer a choice between fixed and variable rates. Applicant should note that the below-listed range might be more favorable with a Co-signer.
- Variable rates 1.00 percent APR to 5.74 percent APR
- Fixed Rates 2.99 percent to 6.74 percent APR
Discover can help student borrowers that struggle with making timely payments. When requested, student borrowers may be able to pause payments or reduce the monthly amount. Flexible payment arrangements can create financial space for borrowers to recover and resume regular payments.
Discover has flexible variations upon request. For example, borrowers can get temporary interest rate reduction. Discover can set up a lower interest rate for up to twelve months to help a borrower. Lower rates can reduce monthly payment amounts. Borrowers can also ask for temporary payment reductions. The bank can arrange interest only payments for up to six months. The loan must be less than sixty days in arrears. The interest only reduction has a minimum or floor; payments must be $50 at minimum per month.
While discover does not charge origination fees, penalties, or late fees, the service companies that serve consolidated loans can have penalties and late fees. Borrowers must be mindful of the distinction and review each loan document carefully. Discover does accommodate bi-weekly payment schedules and borrowers can use autopay to add extra funds to reduce the balance faster.
Discover provides options for deferment. The deferment options are academic, military, public service, and medical residency. When needed, borrowers can defer or postpone the beginning of payments or pause the required monthly payments. A deferment is a limited period in which borrowers do not need to make payments. There are no Discover penalties and no impact on credit score.
In-school payments help borrowers reduce the costs of borrowing. Four years of deferment for undergraduate students adds a substantial amount of interest. Students may not have resources to attend school full time and pay student loan payments. They should be mindful of the impact on the overall costs of the loan.
All borrowers can qualify for deferment; they include the detailed list of the types of deferments below.
- In-school deferments for students enrolled half-time or more in an eligible school. The deferment covers school terms and breaks between terms up to six months.
- Active Military Duty deferments for students on active military duty including qualified National Guard service.
- Public Service deferments postpones payments during service for an eligible organization
- Residency: when enrolled in a health care residency program.
- Forbearance is a temporary form of relief from making regular payments. Forbearance does not depend on a status like being a student or serving in the military.
Forbearance relates primarily to the borrower’s current ability to pay. Life events and unplanned occurrences can interfere with the ability to make timely payments. For example, financial hardship or illness are typical examples of the need for forbearance. Payments may be paused; however, interest continues to build, and forbearance can add to the costs of the loan.
Discover grants forbearance for short periods for unemployment, medically certified disability, and financial hardship. The bank can grant forbearance if the student loan payment monthly total is excessive. Forbearance can total up to twelve months during the life of the loan. Forbearance must be spread out as needed, and borrowers cannot apply them to twelve consecutive months
Discover offers term of ten (10 year) and twenty (20) year terms with a hard credit pull. The maximum overall limit is $150,000. Applicants must apply and go through a hard credit check to get a quote for terms, rates, and amounts. Interest rates vary by loan category and rates reflect the time required, level of education, and prospects for graduates to sustain payments after graduation. Qualified schools are those eligible to receive federal student loans.
Student Loans Undergraduate (example current rates)
Variable rates 1.29 percent to 10.59 percent APR
Fixed rates 3.99 percent to 11.59 percent APR
Student Loans Graduate
Variable rates 1.99 percent to 11.99 percent APR
Fixed rates 3.99 percent to 12.99 percent APR
MBA Loans Graduate
Variable rates 2.24 percent to 8.34 percent APR
Fixed rates 3.99 percent to 9.34 percent APR
Health Professions Loans Graduate
Variable rates 1.99 percent to 6.24 percent APR
Fixed rates 3.99 percent to 6.99 percent APR
Law School Loans Graduate
Variable rates 1.99 percent to 10.59 percent APR
Fixed rates 3.99 percent to 11.59 percent APR
Discover student and graduate loans do not have a co-signer release provision. Refinance or consolidation may release a co-signer if the borrower is financially strong and creditworthy on his or her own status. The standard provisions discharge the loan upon the death or disability of the borrower. There is no discharge upon the death or disability of the co-signer.
Consolidating loans is a program that enables borrowers to refinance one or more student loans. Notably, refinancing is available for borrowers that do not have a degree. Borrowers can consolidate private loans and federal loans into a single, manageable payment. The advantages of consolidation are possible lower interest rates, lower monthly outlay for student loans, and a simplified payment process. Students and borrowers should note that consolidating loans may add time and costs to the overall repayment.
Students can choose a fixed or variable rate. Co-signers may lower the rate, but the consolidation must be in the name of the principal borrower and that borrower must qualify by credit, income, and other factors. Consolidating loans that were created with a co-signer will discharge the co-signer. Consolidation is a method for removing a co-signers obligation.
The minimum amount is $5,000 and borrowers can refinance up to 100 percent of education loan debt. The overall limit is $150,000. Discover does not charge late fees, and there is no penalty for prepayment. Discover offers ten- and twenty-year repayment terms with no late fees. Borrowers can request flexibility in repayment such as lower payments for a specific period.
Private student loans are a great way to supplement other loans and sources of financial aid to help you pay for school, just make sure you do your research and of course, finish your degree, so you can pay back these loans with your new career.