Discover Student Loans Review

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Nadav Shemer
Nadav Shemer
May. 03, 20214 min read

Discover summary

Discover is known for its credit cards, which are used by 50 million cardholders in the United States. Interestingly, Discover Financial Services, Inc. also provides a range of other financial services, including private student loans. Each year, you can borrow up to 100% of your school-certified cost of attendance (including tuition, housing, books, and computer) minus financial aid and federal loans.

Pros

  • International students accepted (with American co-signer)
  • Multi-year feature gets you pre-qualified for future loans
  • Cash reward for good grades

Cons

  • Only one repayment term on offer (15 years)
  • No parent loans
Discover at a glance
4.0

Editorial score

Online experience

Has learning resources, access to rates, mobile app

5.0

Customer services and support

Multiple ways of reaching lender, wide range of hours

4.0

Repayment flexibility

Only offers immediate repayment & limited repayments plans

3.0

Eligibility

Doesn't cover bad credit, low income borrowers

4.0

Variety of Loan Types

Offers most loan types

4.0

Overview

Discover Financial has been providing student loans since it acquired the Student Loan Corporation from Citigroup in 2010. It has grown to become a major provider of student loans, reporting $8.402 billion in outstanding student loan debt at the end of 2019. Discover offers a wide range of student loans, including undergraduate loans, graduate loans, MBA loans, health professions loans, law loans, medical residency loans, and bar exam loans.

Suitable For?

If you’re the sort of person who demonstrates discipline in regard to your finances and studies, then Discover is for you. It has generous variable rates and no prepayment penalties, making it a great option for anyone planning to play off their loan early. Plus, it offers cash rewards for good grades (more on that below).

Loan Features

Credit companies are known for their customer perks. Therefore, it’s no surprise Discover’s student loan service also includes several interesting features.

Here are the highlights:

  • Zero fees. That means no application fees, no origination fees, no prepayment penalties, and no late fees;
  • Auto debit reward. 0.25% interest rate deduction when you are enrolled in automatic payments;
  • Rewards for good grades. Get at least a 3.0 GPA or equivalent and earn a one-time cash reward worth 1% of the loan amount;
  • Multi-year option. When you qualify for your first loan, you’ll also find out if you’re pre-qualified for future loans. If the answer is yes, then you can apply for your next loan with pre-filled paperwork and no impact to your credit;
  • Deferment options. If you are in school at least half-time and on active military duty, serving a public service organization, or in a residency, you may qualify for a deferment;
  • Help tools. On the website, you’ll find free tools include student loan calculators, information on schools, and a college scholarship search tool.

The Application Process

With Discover, you get two ways of applying for a loan: online or by calling 1-800-STUDENT. Either way, the process is straightforward. If you’re applying online, you’ll need to first state whether you’re a student or co-signer, new or returning Discover student loans customer. Next, fill out these details: name, phone number, date of birth, citizenship status, school, degree, and year of expected completion. It takes only a couple of minutes to see your pre-approved offer. If you like the rate offered, just upload any missing documentation (usually just proof of income) to complete the process.

It’s important to note here that by providing your phone number to Discover, you agree for its affiliates to contact you. This means you may start getting calls for other financial products such as credit cards. We’re not saying this is necessarily a good thing or a bad thing; we’re just letting you know so you can make your own decision. 

Like any student loan, a Discover student loan is subject to credit approval and Discover will run a hard credit query before final approval. If your credit doesn’t meet the minimum threshold (approximately 660), you can bring a co-signer. 

Eligibility Requirements

The eligibility requirements for a Discover student loan are fairly straightforward.

You must:

  • Be enrolled at least half-time in a degree program at an eligible school;
  • Be seeking a degree;
  • Be making satisfactory academic progress as defined by your school;
  • Be a U.S. citizen, permanent resident or international student (international students require a co-signer who is a U.S. citizen or permanent resident);
  • Be at least 16 years at the time of application;
  • Pass a credit check (roughly 660 minimum).

Loan Rates

Discover has a range of student loan types on offer, and the fees vary slightly from one to the other. See the table below for the full breakdown of latest rates.

Loan typeVariable ratesFixed rates

Undergrad loans

1.24% - 11.99%


Graduate loans

1.99% - 11.49%

4.49% - 11.99%

MBA loans2.24% - 9.99%4.49% - 10.59%

Residency loans

5.24% - 7.34%

6.24% - 7.99%

Bar Exam loans6.24% - 11.74%6.99% - 12.49%

Repayment Terms

Discover only offers one repayment term: 15 years. However, the good news is you can pay the loan off early without being slapped with prepayment penalties. Also, any time spent in deferment is added to the repayment term.

How Safe Is It? 

Credit card companies tend to have strict security protocols, so it’s no surprise Discover’s student loans platform is big on security too.

According to Discover, here is how it protects your data:

  • It uses 256-bit Secure Socket Layer (SSL) to encrypt your data and hide it from third parties;
  • Limits the sharing of information (such as your social security number) with third parties and maintain physical, electronic and procedural safeguards to protect the information it has about you.

Customer Service

Discover is one of the very few student loan providers that offers 24/7 customer service. It has separate phone lines for U.S. residents, people abroad who have been accepted to study in America, and military service members on active duty.

Phone: 1-800-STUDENT (1-800-788-3368)

Phone from outside U.S./Canada: 1-801-619-2250

Military: 1-844-DFS-4MIL (1-844-337-4645)

Military abroad: 1-801-451-3730

Summary

It’s easy to understand Discover’s appeal when you consider the wide range of loans, features, and discounts on offer. There are even a couple of features here that are difficult to find elsewhere, such as rewards for good grades and loans for international students. Thanks to the generous variable rates and lack of prepayment penalties, this is a solid option for anyone planning to pay off their student debt quickly.

Nadav Shemer
Written byNadav Shemer

Nadav Shemer specializes in business, tech, and energy, with a background in financial journalism, hi-tech and startups. He enjoys writing about the latest innovations in financial services and products. He writes for BestMoney and enjoys helping readers make sense of the options on the market.‎

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