Discover Student Loans Review: Rates, Features & Repayment

In the private student loan marketplace, Discover Bank provides some of the most tried-and-true options. The bank operates the nation’s third largest private student loan provider. With loans for undergraduate, graduate, and multiple pre-professional programs, Discover has you covered at each stage in your education journey.

Of course as a smart borrower you should consider the numbers. Discover offers competitive interest rates and some of the most flexible repayment options of any private lender. And there’s one bonus that makes Discover stand out—borrowers get cash rewards for good grades.

Types of loans Discover offers

Discover works with your school to make sure you only borrow as much as you need. The minimum loan amount for all loans is $1,000. If necessary, though, you can borrow up to 100 percent of your cost of attendance.

Private loans

Borrowers should remember Discover, like any bank, gives private loans subject to different terms than federal student loans. A combination of federal and private loans works best for most borrowers who pursue private financing.

Right now Discover offers loans for the following academic programs:

• Undergraduate Programs (Associate’s or Bachelor’s Degrees)
• Graduate Programs (Master’s and PhD. Degrees)
• MBA Programs
• Medical School (including specialties like dentistry, nursing, pharmacy, veterinary medicine, and more)
• Medical Residency and Relocation
• Law School
• Bar Exam Expenses (for law students)

Consolidation loans

Discover also offers Private Consolidation Loans. Technically these are refinanced loans rather than consolidated loans, but you still get a potential lower monthly payment and a simplified payback process.

Borrowers who choose this option should be aware Discover has longer payback terms for refinanced loans—10-year or 20-year terms—compared to most lenders. You might make smaller monthly payments, but at the expense of racking up more interest.

Eligibility

To apply for a Discover loan, you should:

• Be enrolled at least half-time and on track towards a degree.
• Be making “satisfactory academic progress” according to your school.
• Pass a credit check—as with most private loans, your credit rating helps determine the interest rate you can get.
• Be a US citizen, permanent resident, or international student with a citizen/resident cosigner.
• Be 16 years old or older.

In many cases, especially with undergraduate loans, you’ll need a cosigner. Make sure your cosigner is in it for the long haul, since Discover requires cosigners to keep their name on the loan until it’s paid.

Interest Rates

Discover provides a range of interest rates competitive with the industry average for private student loans, though on the higher end of the spectrum.

Borrowers can choose between fixed and variable rates. Fixed rates stay the same over the life of the loan. Variable rates may rise or fall within a predetermined range depending on the market.

You’re eligible for lower interest rates if you or your cosigner have good credit (think high 600s-700s or above). Rates also vary based on the amount of the loan and the length of the term.

Discover sets a slightly different Annual Percentage Rate (APR) depending on the specific loan. We’re rounded up the numbers below.

Perks and benefits

Rewards for good grades

Discover wants you to do well! As long as your GPA is 3.0 or higher for the year, you’ll get a one percent cash reward for each loan. The reward applies annually if you take out a loan each year. And you can spend the extra cash any way you want.

No fees

You don’t pay application or late fees—every payment you make goes toward the loan.

Auto debit rewards

For enrolling in automatic payment during your repayment period you’ll get a 0.25 percent reduction on your interest rate.

Other Discover perks

• A short loan application, taking less than 15 minutes to complete
• A responsive US-based customer service team

Repayment terms

Private loans are known for having less flexible repayment terms than federal loans, but Discover is one exception. The bank makes multiple forms of repayment assistance available to borrowers, including payment extensions and reduced payments as needed.

Interest-only or fixed plans

For in-school repayment you can choose an interest-only plan or a fixed plan. On the interest-only plan you make payments on the interest but not the principal while in school. You’re rewarded with a 0.35 percent interest rate discount.

The fixed plan requires $25 monthly payments, saving you money on interest later. Those who want to pay early can do so—there’s no prepayment penalty.

Deferment

Deferment lets you delay payments while in school and during your six-month grace period. This option accumulates more interest than the in-school repayment plans.

You can defer for longer periods of time during a medical residency, active military duty or qualifying public service.

Forbearance

Forbearance gives you a chance to postpone loan payments for up to 12 months during times of financial hardship. As with deferment, interest continues to accrue.

For borrowers struggling to make payments, Discover has a few more choices beyond forbearance.

• A temporary interest rate reduction gives you a lower interest rate and payment (a $50 monthly minimum) for up to 12 months.
• A temporary payment reduction allows you to pay down the interest only (a $50 monthly minimum) for up to six months. To get this reduction you should be less than 60 days behind on payments.
• Early repayment assistance lets you postpone payments for three months (within the first three months of your repayment period).

The repayment length for all loans is 15 years for undergraduates and 20 years for graduate students.

Discover it® Student chrome is one of the best options out there for students. This card earns you two percent cash at gas stations and restaurants on up to $1,000 in combined purchases every quarter. Plus unlimited one percent back on all other purchases.

Like Discover loans, this student-oriented card gives a good grade reward—a $20 statement credit for each school year you maintain a 3.0 GPA or higher (for up to 5 years). And this card is accessible to holders with less than stellar credit, giving you a chance to build your credit rating.

See card details/apply or read our full Discover it® Student chrome review.

Discover Cashback Debit Account and Discover Online Savings

Discover also offers banking services, including savings and checking accounts. Discover Cashback Debit Account offers an account with no maintenance fees, and the ability to earn 1% cashback on debit card purchases of up to $3,000 per month.

In turn, the Discover Online Savings Account account offers a 1.80% APY without a required minimum balance—higher than the industry standard!

Alternatives to Discover Student Loans

To give you an idea of how Discover Student Loans compare to other lenders, we’ve created a handy table:

Earnest

Earnest offers student loan refinancing with variable  and fixed interest rates.  What’s best about Earnest is your ability to set your own repayment schedule!f

Current Interest Rates

• Fixed SLR – 3.74% - 8.49% (includes 0.25% autopay discount)
• Variable SLR – 2.49% - 7.99% (includes 0.25% autopay discount)

Eligibility

• Pass a credit check
• Be at least 18
• Be a a United States citizen or permanent resident
• Your debt must be from a Title IV accredited college or university
• Debt must be for a completed degree, a degree estimated to complete the next semester, or an incomplete bachelor’s or associate’s degree

Perks & Benefits

• Set your monthly payment
• Skip one payment a year
• Swap between fixed and variable interest rates

See loan details/apply or read our complete Earnest review.

SoFi

SoFi also offers student loan refinancing with fixed rates and variable rates available.  Like Earnest, you can choose your own repayment schedule.

Eligibility

• Be a U.S. citizen of legal age
• Be employed or have an offer of employment to start in the next 90 days
• Have graduated from an eligible Title IV accredited university or graduate program
• Have at least $5,000 in student loans to refinance (federal or private)

Perks & Benefits

• Application is fast, easy, and all online
• No prepayment penalties
• No hidden fees

See loan details/apply or read our full SoFi review.

Credible

Credible is a loan aggregator, meaning they show you all the loans you can qualify for in one place. Your rates will vary by lender, but you can choose to have Credible show you the lowest rate first.

Eligibility

• Varies by lender

Perks & Benefits

• Pre-qualification process is totally free and takes about two minutes
• No hard-pull on your credit

See details/apply or read our full Credible review.

Lending Tree

Lending Tree is also a loan aggregator, so your rates will vary by the lender.

Eligibility

• Must apply your loan to and Associates Degree, Bachelor’s Degree, Master’s Degree, or PhD

Perks & Benefits

• Fast and easy application
• Those with little to no credit may apply

See details/apply.

Summary

Discover products are worth a serious look if you’re in the market for private student loans. The company offers all the basics, but its grade rewards and generous repayment options set Discover apart.

Read more

• 5 Cool Discover it® Cardmember Benefits You Didn’t Know About
• Discover’s 100% U.S. Based Customer Service Answers Your Questions 24/7