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Monday, August 2nd
If you think "credit cards" when you hear the name Discover, you'd be right - but they are also one of the nation's largest lenders when it comes to private student loans. Whether you're studying as an undergraduate, heading to graduate school, or need a loan to cover your residency, MBA, or period of study for the bar exam, Discover has a student loan for you.
Undergraduate loan eligibility terms
While eligibility terms depend on the loan you're seeking, here's what you need for a Discover Undergraduate Loan:
You can borrow up to 100% of the cost of attendance at your school, including books, housing, tuition and more; the amount will be certified by your school, ensuring that you don't borrow more than you'll actually need.
It's also no surprise that Discover has rewards that will remind you of their Cashback Bonuses offered with their credit cards. Like many lenders, Discover will give you a .025% interest rate reduction if you enroll in automatic payments during your repayment term. Also, if you get a minimum GPA of 3.0, you can qualify for a one-time cash reward of 1% of your total disbursed loan principal amount. Depending on the size of your loan, that could cover quite a few textbooks!
Low monthly payments
Other benefits of student loans through Discover are low monthly payments ($25/month) if you choose an in-school repayment option, deferment periods if you're on active military duty or serving in a public service organization or medical residency, and an assistant department if you're having financial difficulties that are impacting your ability to repay your student loans.
Loan servicing issues (in the past)
Although Discover Student Loans' perks are attractive, it's important to be aware of their history in the student loans market. Back in 2015, Discover Bank was ordered to pay a fine of $2.5 million dollars to a penalty fund established by the Consumer Financial Protection Bureau, along with returning $16 million to over 100,000 borrowers. The reasons for the fine included illegal debt collection tactics, such as early-morning and late-night calls to borrowers, illegal servicing practices, and other issues. While it appears that Discover has cleaned up its act in the meanwhile, we can't ignore that their loan servicing has had significant issues in the past.
Overall, Discover Student Loans offer significant discounts and cash bonuses to borrowers with competitive terms and rates on their student loans. We give them a good rating that could easily improve as Discover continues to show improvement in honesty and ethics when servicing student loans.
As the costs of higher education rise, so does the need for student loans. While some individuals are eligible for federal loans, those loans don't always cover the full cost of getting an education - not just tuition and room/board, but books, laptops, transportation and other expenses. And, people who are ineligible for federal loans don't necessarily have overflowing savings accounts to match their college or university costs.
Private student loans are the way that many students close that gap. On average, students have nearly $40,000 in student loan debt at the time of graduation; without those funds, their aspirations of being a teacher, engineer, or social worker may have been put on hold indefinitely.
Fortunately, there are many lenders who want to make it as affordable and simple as possible to complete undergraduate and graduate-level studies. Some represent well-known, established financial institutions, while others work directly with networks of community banks to get much-needed cash into the hands of eager learners.
Comparing offers from lenders can be as easy as going online; in a matter of minutes and mouse clicks, you can see a variety of interest rates, repayment terms, and other details of each program for which you are eligible. This saves you significant time compared with going hat in hand to your local bank or other lending institution, hoping that they will say yes to your loan application.
When deciding on which lender to use for your student loan, you should consider the following factors:
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