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      July 8, 2020

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Discover Student Loans vs Wells Fargo

To help you find the Best Student Loans, TopConsumerReviews.com provides you with an in-depth comparison of Discover Student Loans and Wells Fargo.

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Apply for Your Student Loan at SunTrust Today 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.

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2020

Student Loan Reviews

3.5 stars
Discover Student Loans

DISCOVER STUDENT LOANS

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Features:

  • No application or origination fees
  • No prepayment penalties
  • No late fees
  • No payments required until 6 months after leaving school
  • Variable interest rates starting at 3.49% APR
  • Fixed interest rates starting at 6.24%
  • Several rewards programs, including good grades and auto debit
  • Customer service: 800-STUDENT (788-3368)

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:

  • Enrollment at least half-time in a Bachelor's or Associate's program, seeking a degree
  • Satisfactory academic progress (defined by your school)
  • U.S. citizenship or permanent resident status (or a cosigner who is)
  • Credit check
  • 16 years or older

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.

Unique rewards

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.

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2 stars
Wells Fargo

WELLS FARGO

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Features:

  • No application or origination fees
  • No prepayment penalties
  • No payments required until 6 months after leaving school
  • Interest rate discounts available
  • Variable interest rates from 3.39% to 10.49% APR
  • Fixed interest rates from 5.94% to 12.99% APR
  • Minimum monthly payment of $50 during repayment period
  • Customer service: 888-511-8086

Wells Fargo is a well-established name in the financial industry, from checking accounts to mortgages and investments. They offer a variety of student loans, including Wells Fargo Collegiate and Wells Fargo Graduate programs.

Student loan criteria

In order to be eligible for a Wells Fargo student loan, you must meet the following criteria:

  • Enrolled in an undergraduate or graduate program, seeking a degree, certificate, or license (you can be enrolled less than half-time)
  • U.S. citizen or national, permanent resident alien, or international student who is a temporary resident alien with a current US address and evidence of eligibility
  • Meet certain credit/employment/debt-to-income requirements OR have a cosigner (US citizen cosigner required for permanent and temporary resident aliens)

Check current rates

Before starting an application, we recommend that you click on the green "Check Rates" arrow in the middle of the main student loans page. You'll enter your school's information (state and name), along with your field of study. You'll then be taken to a page that will show you all of the current interest rate ranges for your loan, whether that's a fixed-rate loan for graduate school or a variable-rate loan for your four-year degree.

During the actual application process, you'll need to provide your school's information, your Social Security number, your permanent (home) address, employment and income information for you (and your cosigner, if you have one), the costs of attendance, and, finally, the amount of financial assistance you expect to receive from any source.

Interest rate reductions

Wells Fargo offers several ways to reduce your interest rates. First, if you set up your monthly payments to be automatically withdrawn (known as ACH), you may qualify for a discount of 0.25% off your interest rate. Also, they offer three "relationship interest rate discounts" if you or your cosigner have an established history with Wells Fargo before you complete the loan process: 0.25% discount if you have a prior federal or private student loan through Wells Fargo, 0.25% discount if you have a qualifying consumer checking account with Wells Fargo, or a 0.50% discount for a Wells Fargo PMA Package (a combination of a specific number and type of accounts, including Premier Checking, investments, and so on). Finally, if you have newly-established (or poor) credit, having a cosigner with good credit can both help you qualify for a student loan and get a lower interest rate.

Wells Fargo also saves you money with no application or origination fees, and no prepayment penalties if you pay off your loan early.

No repayments for 6 months

With Wells Fargo student loans, you will not be required to make any repayments until 6 months after you graduate or leave school. Be aware that there's a maximum in-school period: you have four years from your first loan disbursement if you attended a 2-year school, five years if your loan covers graduate school, and seven years from your first disbursement if you attended a 4-year school. In other words, Wells Fargo doesn't penalize you for being on "the 5-year-plan" (taking longer than the traditional 2- or 4-year period expected with an Associate or Bachelor degree), but you can't claim to still be in school for an unlimited period of time without beginning the process of repayment.

Negative reviews

Unfortunately, we found hundreds of reviews from students with loans through Wells Fargo that expressed deep dissatisfaction with the service they received once the loan was disbursed. Some of the problems we frequently found were errors on Wells Fargo's side that cost borrowers money and hurt their credit score, unhelpful representatives, and lack of flexibility when the unexpected occurs (such as death or disability interfering with borrowers' ability to repay). Across multiple websites, it was difficult to find reviews from students who were happy with the service they received from Wells Fargo over the course of their student loans, even when those individuals had been paying their loans faithfully over several years.

While Wells Fargo has the advantage of being a major player in the financial industry, it seems that they don't apply that experience and skill to their servicing of student loans. You may be more satisfied with the service you receive from another lender in our review.

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Continued from above

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:

  • Interest rates. The higher your interest rates, the more you pay over the life of the loan. Does the lender have rates that are competitive? Does the lender offer you the choice between fixed and variable rates?
  • Loan terms. What is the repayment term? Does it give you enough time to get a good job and pay it back? Can you pay it off in advance with no penalty?
  • Discounts. Can you get your interest rates lowered by setting up automatic payments from your checking account? Will you get any perks for having a relationship with the lender in other ways, such as a checking account or credit card?
  • Reputation. Some lenders have a solid history of working with borrowers, while others have a not-so-great track record when it comes to customer service after the loan has been disbursed. How does this lender measure up?

TopConsumerReviews.com has reviewed and ranked the best Student Loan providers available today. We hope this information helps you to get the money you need for your studies right away!

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