Discover Student Loans Review: Get Cash Back for Good Grades

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Discover Student Loans Review
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Private Student Loan rates starting at 1.04%

1.04% to 11.98% 1
VARIABLE APR

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1.13% to 11.23% 2
VARIABLE APR

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3.80% to 9.36% 3
VARIABLE APR

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  • Variable APR

Discover student loans not only feature competitive interest rates and no fees, but they also offer something no other student loan company does: a one-time cash reward if you’re grades are high enough.

Discover student loans is best for high-performing students pursuing a variety of degrees — including international students without a Social Security number – who value repayment protections like deferment and forbearance.

Discover is also a top option for consolidating and refinancing student debt, whether you’ve already earned your degree or are pursuing it. Refinancing student loans allows you to streamline your repayment, and potentially save money or lower your monthly payment.

What to like: What to keep in mind:
Competitive APRs, no fees
Cash reward for GPA
Variety of repayment protections
Multiyear approval for undergrads
In-school refinancing available
Easy-to-use online platform
Eligibility: No SSN necessary, but other requirements are stiff
No ability to prequalify for rates
Limited repayment term options
No cosigner release available

Discover student loans review

Discover offers the fixed and variable interest rates on the following student loans to current and prospective students, parents and existing student loan borrowers:

  • Undergraduate loans
  • Graduate loans
  • MBA loans
  • Health professions loans
  • Law loans
  • Residency loans¹
  • Bar exam loans²
  • Consolidation loans

Each of these loans allow borrowers to apply with a cosigner to qualify or access lower interest rates.

¹Cover the cost of residency, internship, relocation and board exam review. Zero fees. Choice of fixed or variable interest rate. Loan amounts are disbursed to the borrower via check or direct deposit. Up to $18,000 for Allopathy, Dentistry, Optometry, Osteopathy, Pharmacy, Podiatry and Veterinary Medicine. Aggregate loan limits apply. Up to $5,000 for Nursing, Occupational Therapy, Physical Therapy and Physician Assistant. Aggregate loan limits apply.

²Cover the cost of bar study prep classes and living expenses. Zero fees. Choice of fixed or variable interest rate. Loan amounts are disbursed to the borrower via check or direct deposit. Up to $16,000 for bar exam preparation. Aggregate loan limits apply.

Borrowing limits

If you’re an undergraduate looking for just a little help, Discover student loans could be ideal, as it allows customers to apply for as little as $1,000 in education funding.

With most Discover student loans, you can also borrow up to 100% of your school-certified cost of attendance (including tuition, housing books and more) though aggregate loan limits apply. Here are the exceptions:

  • You can borrow from $1,000 up to either $5,000 or $18,000 with a residency loan, depending on your area of focus.*
  • You can borrow up to $16,000 for bar exam preparation, with a minimum of $1,000 per loan.*
  • You can borrow up to $150,000 in aggregate student loan debt, with a minimum balance of $5,000. Higher limits apply for certain fields of study.*

*Aggregate loan limits apply

Repayment options

For undergraduate and graduate loans, you have three repayment options. Here is how Discover describes these choices:

  • In-School Interest-Only Repayment: Students can elect, during the application process, to make interest-only monthly payments while in school and during the grace period to lower overall loan cost and receive a 0.35% interest rate discount.**
  • In-School Fixed Repayment: Students can elect, during the application process, to make $25 fixed, monthly payments while in school and during the grace period to lower overall loan cost.
  • Deferred Repayment: Students can choose to have payments deferred, which means no payments are due until six months after graduation for undergraduate loans (9 months for graduate loans) or enrollment drops below half-time.

Discover also notes: “Students have the option to make either interest-only or $25 fixed, monthly payments while in school and during the grace period to lower the overall loan cost. However, students can also choose to defer payments, meaning that monthly payments are not required until after the grace period or enrollment drops below half-time.”

These options vary for residency and bar exam loans as well as parent and consolidation loans.

With a consolidation loan, the first payment will be due approximately 30-45 days after the loan consolidation is complete and the loan is disbursed. To learn more, visit Discover.com/student-loans/consolidation.html

**Visit Discover.com/student-loans/help/interestonly for terms and conditions.

What to like about Discover student loans

1. Competitive interest rates and no fees
2. Cash reward for grade point average
3. Variety of repayment protections
4. Multiyear approval for undergraduate loans
5. In-school refinancing available
6. Easy-to-use Discover student loans online platform

1. Competitive APRs and no fees

Before you choose a student loan, it’s best to compare interest rates and fees to make sure you’re getting the best deal.

Here’s the good news: Discover doesn’t charge any fees whatsoever – not even late fees.

The bank’s APRs, which can be fixed or variable, are also reasonable. You’ll even get an interest rate reduction of 0.25 percentage points if you choose autopay for your monthly payments.

Here’s how APRs for each loan type break down, as of June 30, 2021:***

Loan Type Variable APRs Fixed APRs
Undergraduate loans 1.12% – 10.22% 4.24% – 11.99%
Graduate loans 1.87% – 11.87% 4.49% – 12.59%
MBA loans 2.12% – 8.22% 4.49% – 9.59%
Health professions loans 1.87% – 5.87% 4.49% – 7.34%
Law loans 1.87% – 10.22% 4.49% – 11.59%
Parent loans 3.87% – 12.87% 5.49% – 13.99%
Residency loans 2.87% – 5.62% 4.99% – 6.99%
Bar exam loans 3.87% – 10.87% 5.49% – 11.99%
Consolidation (10 yr) 1.74% to 5.74% 3.49% to 6.74%
Rates current as of July 1, 2021

*** Lowest APRs shown for Discover undergraduate, graduate, health professions, law and MBA loans are available to the most creditworthy applicants, and include an interest-only repayment discount and a 0.25% interest rate reduction while enrolled in automatic payments. Lowest APRs shown for Discover residency, bar exam and parent loans are available to the most creditworthy applicants, and include a 0.25% interest rate reduction while enrolled in automatic payments. Lowest APRs shown for Discover private consolidation loans are available to the most creditworthy applicants who are approved and include a 0.25% interest rate reduction while enrolled in automatic payments. 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 0.125% as of July 1, 2021. 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 APRs are only available to applicants with the best credit. The APR will be determined after an application is submitted. It will be based on credit history, the selected repayment option and other factors, including a cosigner’s credit history (if applicable). If a student does not have an established credit history, the student may find it difficult to qualify for a private student loan on their own or receive the lowest advertised rate. Learn more about Discover Student Loans interest rates.

2. Cash reward for grade point average (GPA)

Although it’s easy to focus on the interest rates and fees, there are other features to consider that Discover student loans offer.

Discover is a good choice if you’re a stellar student. As long as you maintain at least a 3.0 GPA (or equivalent) and meet certain conditions, you’ll get a one-time cash reward on each new Discover undergraduate or graduate student loan.****

This perk is available for the following loans:

  • Undergraduate loans
  • Graduate loans
  • MBA loans
  • Health professions loans
  • Law loans

You can apply to redeem the reward within six months after the academic term covered by the loan has ended or six months after the final disbursement is made on the loan, whichever is later.

**** Get a cash reward on each new Discover undergraduate and graduate student loan when you earn at least a 3.0 GPA (or equivalent) in any academic period covered by the loan. Limitations Apply. Visit DiscoverStudentLoans.com/Reward for terms and conditions.

3. Variety of repayment protections

No matter your loan type, Discover packages each with an extensive list of repayment protections. These safety nets could come in handy should you struggle to make your monthly payment, whether because of a lost job or other financial hardship.

Deferment options are available and Discover recommended that consumers visit its website to learn more about options.

4. Multiyear approval for undergraduate loans

If you plan on attending school for multiple years, Discover could ease your future borrowing. The bank’s multiyear option allows you to prequalify for future loans, whether you’re a wide-eyed freshman or coming up on your last couple years of college.

This simplifies the application process should you desire to borrower Discover student loans on multiple occasions, though you would need to pass a credit check each time.

Discover isn’t the lone lender with this benefit. Citizen Bank’s multiyear approval is also an appealing option.

5. In-school refinancing available

Discover student loan consolidation isn’t just accessible to former students. Discover is one of few lenders – a group that includes EdvestinU – that allows current students to group and refinance their loans.

This could be a helpful option if you’ve borrowed multiple student loans already, are prioritizing in-school payments and want to streamline your debt repayment.

Just be aware that refinancing student loans with Discover while you’re enrolled would erase your previous loan protections, such as access to federal loan programs like income-driven repayment and basic features like a traditional grace period. With that said, you could defer repayment on your newly consolidated Discover loan if you…

  • Return to school
  • Serve in the military
  • Work in public service
  • Take up a health professions residency

6. Easy-to-use Discover student loans online platform

To apply for Discover student loans, you’ll start by entering your school, and the type of loan you want.

Image: Discover

From there, you’ll share information about yourself, including your:

  • Full name
  • Email address
  • Phone number
  • Date of birth
  • Citizenship status

The full Discover student loan application process takes just 15 minutes. Keep in mind, you might need to share some documents to support your income and residence information.

If approved, you can manage your account online directly through Discover. The bank no longer contracts Great Lakes to handle servicing.

What to keep in mind about Discover student loans

Like other private student loans, Discover student loans don’t include access to federal loan features like income-driven repayment plans and forgiveness programs.

Unlike some other private loans, however, Discover is unique in the following ways.

1. Eligibility requirements accessible for some (not all) borrowers
2. No ability to prequalify for rates
3. Limited repayment term options
4. Option to apply with a cosigner – but no cosigner release available

1. Eligibility requirements accessible for some (not all) borrowers

For Discover undergraduate student loans, here are the lender-provided eligibility requirements:

To qualify, the borrower must:
● Be at least 16 years old at the time of loan application. Cosigner required if under 18.
● Be a U.S. citizen, permanent resident or international student (International students require a creditworthy cosigner who is a US Citizen or permanent resident).
● Pass a credit check.
● Be enrolled at least half-time and making satisfactory academic progress in a Bachelor’s or Associate’s degree program at an eligible school.

Students may have the option to apply for a Discover student loan with a creditworthy cosigner. Applying with a creditworthy cosigner may improve the likelihood for loan approval and may provide a lower interest rate.

To qualify, the cosigner must:
● Be at least 18 years old at the time of loan application.
● Be a U.S. citizen or permanent resident.
● Pass a credit check.

Discover stands out because it doesn’t require borrowers to have a Social Security number.

International students are welcome to apply for Discover student loans, but they need a cosigner who is a U.S. citizen or permanent resident to get approved. If you’re a noncitizen but can’t find a cosigner, Prodigy Finance could be a better lender option.

Eligibility criteria vary for other types of Discover student loans.

Are you the parent? Check out…
How to Help Your Child Qualify for a Discover Student Loan

2. No ability to prequalify for rates

Some student loan companies, such as SoFi, allow you to see interest rate offers with a soft credit check before you officially apply, which gives you an idea of which lender might offer the best deal.

However, you have to apply with a hard credit check to see what Discover can offer you. Hard credit checks can ding your credit score, so it’s wise to keep them to a minimum.

3. Limited repayment term options

Most loans have a 20-year repayment period. The only exceptions are undergraduate loans with a 15-year period and consolidation loans with 10-year and 20-year periods.

With that said, you could always prepay your Discover student loans. There’s no penalty of paying it off ahead of schedule.

Student Loan Prepayment Calculator

Total current balance

Average interest rate

Current monthly payment

Please choose one:

How much extra do you want to pay on your monthly payment?

Student loan refinancing APRs as low as %. Check your rate in 2 minutes.

If you’d like to customize your loan length, however, you might be better off with a lender that allows for more flexibility. College Ave, for instance, awards 5, 8, 10 and 15-year terms on student loans. And if you’re in the market for student loan refinancing, Earnest is the king of flexibility: You could choose from one of 180 options spanning five to 20 years.

4. Option to apply with a cosigner – but no cosigner release available

Applying for Discover student loans with a cosigner can help you qualify and, perhaps, score a lower interest rate. Unfortunately, however, the cosigner would be on your loan agreement permanently.

This is one major feature the Discover student loan program is missing. A cosigner release allows cosigners to be removed from the loan after a period of on-time payments and a re-evaluation of the primary borrower’s creditworthiness.

Without that feature, cosigners are stuck with the loan on their credit report until it’s paid off or the borrower refinances with another lender.

Discover student loan review: Is it right for you?

Although the Discover student loans cash reward perk is nice, don’t let it drive your decision. If you can score a lower interest rate somewhere else, you’d likely save more on interest over the life of the loan than you’d get from the one-time cash bonus.

Even considering its expansive menu of repayment protections, Discover’s lack of a cosigner release policy and prequalification process also makes it more restrictive than some other lenders. Your best bet is to shop around and compare several student loan lenders for private student loans or, if you’re inclined, student loan refinancing.

The more time you spend doing the research, the more likely it is that you’ll find the best deal for you.

Andrew Pentis contributed to this report.

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