Discover Student loans provides both fixed and variable private student loans, with rates starting at 3.25% APR. Both undergraduate and graduate students may apply for loans through Discover. These student loans are especially appealing to students who have to cover living expenses that are unrelated to tuition, such as housing, as Discover loans can be applied to other costs aside from just tuition. Furthermore, students are not required to make payments until they are out of school. While these loans may be appropriate for some borrowers, many borrowers may find that they will benefit from retaining their Federal loans as these offer the possibility of switching to a more forgiving income-driven repayment plan or another program such as forgiveness. Discover does not put a maximum on the amount of loans that a student can borrow. Thus, these loans are appealing to students who need to borrow a large sum of money to fund their education.
Highlights of Discover Student Loans
Discover Student loans provide fee-free loans to students. There is no cost at the time of loan origination. There is also no maximum amount that students can borrow. However, students should be aware that Discover loans do not provide consolidation services. This means that they will be unable to lump all their individual loans into one large payment, rather they will have to pay them individually or consolidate through another company.
Who is Eligible for Discover Student Loans?
- Applicants who are at least 16 years of age
- Applicants who have a solid credit history
- Students who are enrolled at least half-time in a degree program at an accredited college or university
- U.S. citizens, international students, or permanent residents of the United States
What Are Discover Student Loans?
Discover student loans are loans geared towards students who have exhausted funding through the FAFSA. They encourage students to borrow responsibly. The Discover Private Student Loans are open to both undergraduate and graduate students. These loans provide either a variable interest rate or a fixed interest rate, with rates starting from 3.25%. All loans are free of origination fees and postpone repayment while the student is in school at least half time. Students who graduate receive a check worth 2% of their loan amount. These loans also cover up to the full amount of tuition, books, and living expenses after accounting for other types of financial aid awarded to the student. The minimum amount of the loan is $1,000. There are a number of different loans, with different rates and eligibility criteria.
Discover loans differ from federal loans notably during the repayment process. Discover only allows student two options during repayment: deferred or in-school payment. Federal loans provide students with more flexibility to pay based on their income, etc. The three main types of Discover student loans, along with their fixed and variable interest rates, are listed below:
- Undergraduate loans: provide students with a variable rate of 2.99%-9.12% APR or a fixed rate of 6.15%-11.99%
- Graduate, MBA, Law, Health Profession loans: provide students with a variable rate of 2.99%-8.62% or a fixed rate of 6.15%-11.24%
- Residency loans, Bar Exam loans: provide students with variable rate loans starting from 4.12% to 7.62% or fixed rate loans starting from 6.49%-9.99%
What are the Benefits?
Discover’s student loans have a number of advantages, which make these loans popular among undergraduate and graduate students. By far, the most appealing benefit is something called a graduation reward. This is the only company that will pay students who graduate. In fact, the company provides a reward worth 2% of the student’s loan principal balance. This reward is sent to the student in the form of a check after their graduation date. This reward is especially appealing because recent college graduates may not yet have a job secured and thus be at a higher need for income. However, this award is only offered one time. This reward also provides some benefit to Discover, as students who graduate are more likely to repay their loans than those students who do not graduate from college. In order to be eligible, students must select a loan with a variable rate; students who select fixed rate loans are not eligible for this reward. In addition to the graduate reward, Discover offers the following benefits:
- A .25% reduction in interest rate when borrower’s agree to pay their loan automatically
- More availability of customer support representatives — in fact, borrowers can call 24 hours a day, any day of the week
- A 1% cash reward to students who hold at least a 3.0 grade point average
- Students may also enter the Discover scholarship sweepstakes
- Less stringent credit history requirements than other companies
- Flexible payment options including: phone payments, payments by mail, or auto-pay system online which offers customers a .25% interest deduction
What Do I Need to Apply?
The Discover website indicates that is easy to apply for a loan with their company. In fact, students can apply online or by calling 1-800-STUDENT, and completing the application only takes 15 minutes or less. Furthermore, these loans allow students to add a cosigner if they would like, which may qualify them for a lower interest rate, though one is not required. It is important to note that cosigners are not released from their commitment after a certain amount of time passes, like some other companies. If the applicant’s loan request is approved, then the student may choose whether they want a variable or fixed interest rate as well as whether they will opt to repay some of the loan while they are in school or whether they would like to defer repaying the loan until they graduate. Students who opt the in-school repayment option are required to pay $25 per month towards their loans in order to reduce the amount of interest that accrues on their loan while they are in college. The last step is to sign for and accept the loan terms.