Discover Student Loans Review: Best Alternatives

Editor's Note: Discover announced they will be selling their student loan portfolio and no longer originating new student loans after January 31, 2024.

Their loans that they previously originated are being transferred to Firstmark Servicing to handle loan servicing. There is a scam going around on social media about these loans potentially being discharged. Please don't fall for this scam.

If you are looking for alternatives, check out our list of the best private student loan lenders.

Looking for a low interest loan to finance your higher education? Discover student loans may be the product you want.

With no fees, low interest rates, and forbearance options, Discover is a market leader in private student loans. But these loans aren’t for easy money.

Borrowers need an excellent credit score or a cosigner to get the loans. Think a private student loan from Discover makes sense for you? We’ll explain the loan features and scenarios where a private student loan from Discover makes sense.

Discover Undergraduate Loans

Borrow up to 100% of school-certified costs, including tuition, housing, books and more with a Discover Undergraduate Loan at an eligible school for your bachelor's or associate degree. Aggregate loan limits apply. 

This loan is a great option for borrowers who need a little more than their federal loans to pay for school. Students can choose from in-school or deferred repayment options, and there is never a penalty for prepayment.

This loan has no fees period (like all Discover student loans), and doesn't require a cosigner if you have great credit. However, most borrowers will still need a cosigner for their student loans. 

Hard work pays off. Literally. You can qualify for a one-time cash reward on each new Discover student loan if you get at least a 3.0 GPA (or equivalent) in college or graduate school.^** 

Discover also has a 0.25% interest rate reduction while enrolled in automatic payments.^*** 

These loans have a 15-year repayment term, which is longer than the Federal standard plan, but shorter than other options out there.

When Does This Loan Make Sense?

The undergraduate student loan from Discover sounds like a good deal. But most students should avoid private student loans for their undergraduate degree.. Typically, students can pay for an undergraduate degree with a combination of savings, federal loans, scholarships, and work.

Federal loans offer more flexible repayment terms, and your parents or grandparents won’t have to cosign on the loans. If you’re contemplating private loans for your undergraduate degree, you may need to find a less expensive school.

Need to know more about avoiding student loan debt? Check out these pieces:

Discover Graduate Loans

Graduate Loans from Discover cover loans for Law School, Health Professional Schools (such as Medical or Dental school), MBA programs, and traditional Graduate and PhD programs. With loans from Discover, you can borrow up to 100% of your school-certified costs, including tuition, housing, books and more. Aggregate loan limits apply. 

Students can choose from in-school or deferred repayment options, and there is never a penalty for prepayment. 

These loans qualify for a one-time cash reward on each new Discover student loan if you get at least a 3.0 GPA (or equivalent) in college or graduate school.^** 

Discover also has a 0.25% interest rate reduction while enrolled in automatic payments.^*** 

Discover Graduate loans come with a 20-year repayment term.

When Does This Loan Make Sense?

Private graduate student loans make sense in some circumstances. If you expect to have a high salary and low unemployment following graduation, private loans are a reasonable way to finance your education. Of course, it’s easy to delude yourself about your job prospects following graduation.

Discover student loans can make particular sense for students with established credit histories who can qualify for great interest rates without a cosigner. The graduate school loans from Discover aren’t as flexible as federal student loans, but they carry low interest rates.

If you need to borrow for graduate school, weigh the flexible repayment terms of the Federal Student Loans against the low interest rates of private loans. It’s up to you to decide what’s best.

Discover Parent Loans

Discover also offers parent loans to pay for college. These are loans that a parent will take out to cover their child's education costs. You can learn more about Parent Loans To Pay For College here.

The Discover Parent loan allows you to borrow 100% of the cost of attendance as provided by the college or university. These loans don't have any origination fees or pre-payment penalties. This loan does have an auto-debit discount as well.

The loan is set for a 15 year repayment term.

When Does This Loan Make Sense?

Honestly, we are against parents borrowing to pay for their children's education. It rarely makes sense. 

However, there could be some situations where the parents can afford to pay, but may have illiquid assets and prefer to borrower. There may be better rates and terms in this scenario.

Discover Residency Loans

Following medical school, most doctors move into a residency program. While most residency programs pay doctors, doctors must pay for housing and moving costs. 

With the Discover Residency Loan, you can cover the cost of residency, internship, relocation and board exam review. 

There are different loan limits for residency loans compared to other lending products. Currently, you can borrow: 

• Up to $18,000 for Allopathy, Dentistry, Optometry, Osteopathy, Pharmacy, Podiatry and Veterinary Medicine 
• Up to $5,000 for Nursing, Occupational Therapy, Physical Therapy and Physician Assistant. 

Aggregate loan limits apply. 

Discover residency loans don't require a cosigner if you have an established credit history. Otherwise, you'll need to find a cosigner for your loan. 

Students can choose from in-school or deferred repayment options, and there is never a penalty for prepayment. You must still be attending school at least half-time at the time you submit your application to be eligible for the interest-only or fixed repayment options. Discover Residency loans come with a 20-year repayment term. 

When Does This Loan Make Sense?

If possible, avoid taking out loans during residency. A resident’s salary is small, but it should cover the expenses associated with residency. Consider negotiating for a relocation package if moving costs will drive you into debt.

If you can’t qualify for a relocation package, don’t turn to loans just yet. First consider opening a 0% APR credit card.

Use the 0% credit card to finance expenses for a few months, and then work on aggressively repaying the credit card.

Residents should also consider refinancing their student loans at lenders like Laurel Road or Splash Financial. Both offer great perks to residents and doctors who refinance with them. And it can save you a lot of money.

Discover Bar Exam Loans

Law students can cover their living expenses and bar exam costs with a Bar Exam Loan from Discover. 

This loan has a limit of $16,000 for bar exam preparation. Aggregate loan limits apply. 

Students can choose from in-school or deferred repayment options, and there is never a penalty for prepayment. You must still be attending school at least half time at the time you submit your application to be eligible for the interest-only or fixed repayment options.

This loan doesn't require a cosigner if you have an established credit history. But many law school students may find themselves needing a cosigner. Also, make sure you understand what loans are eligible for loan forgiveness for lawyers before you sign up. 

This loan has a 20-year repayment term. 

When Does This Loan Make Sense?

Ideally, a young J.D. can find a job with a firm who will pay their salary while they study for the Bar Exam. Increasingly, such an arrangement is fairy tale. Many law school graduates need a loan just to become firm legal. If you cannot cover living expenses in between graduation and the bar, consider a few options. First, cut costs to the bare minimum.

You’re practically living in the library anyways, so renting a bedroom in a house is fine. Next, try to cover your costs using any remaining savings a 0% APR credit card. If that fails, go on to a private student loan.

How Do Discover Student Loans Compare?

Discover student loans have competitive rates and low fees. But they won't be right for everyone. Check out this quick comparison:

Discover Student Loan Refinancing

Discover also offers student loan refinancing. They call it a consolidation loan, but it's really refinancing. They allow you to refinance both federal loans and your existing private student loans.

Discover student loan refinancing has zero fees - which is awesome for borrowers. They may require a cosigner if you don't have a strong credit history, but it's not required for all borrowers.

To refinance student loans, you must have at least $5,000 in loans but under $150,000. If you have more than $150,000, you might need to look at alternatives like Citizens Bank or LendKey.

Discover consolidation loans have two repayment terms - 10 years and 20 years. And the rates you'll be eligible for reflect that term.

When Does This Loan Make Sense?

If you graduated from school with debt, and you’ve got a steady job with a decent salary, it might make sense to consolidate your debt and lower your interest rate. Consolidating to a private loan means you lose income based repayment options.

But with Discover, you’ll retain the ability to defer loans if you return to school. If you want to refinance your student loan, be sure your credit is in great shape and shop around for the best interest rates and terms that fit your life.

Make sure you always shop around when it comes to student loan refinancing. We recommend Credible to refinance your student loans, and if you do, you can get up to a $1,000 gift card bonus. Check out Credible here.

What Borrower Protections Are Available?

Discover wants their borrowers to succeed and repay their student loans. As a result they’ve created several programs to help borrowers avoid delinquency.  In addition to offering a 6-9 month in school deferment program (when you don’t have to make payments), these are the plans Discover offers.

To find out if you qualify for one of these programs call the Discover Repayment Assistance team at 1-800-STUDENT. These are some of the most borrower protections that you'll find on private student loans.

Still, you won't be eligible to join income-driven repayment plans as you can when you have federal student loans. Also, Discover's maximum forbearance period is quite as long as some other private lenders offer. 

Who Qualifies To Apply?

Unfortunately, Discover doesn't disclose its minimum credit score requirements. It also doesn't offer a tool that allows borrowers to check their pre-qualified rates before filling out a full application and submitting to a hard credit inquiry.

At a minimum, borrowers typically need to have a credit score in the "Good" range (670 and above) to qualify for a student loan without a cosigner. But to receive Discover's lowest rates, your credit score will probably need to be at least in the mid-700s.

Are There Any Fees?

No, you won't pay any application fees, origination fees, or prepayment penalties with Discover student loans. And unlike most lenders, Discover doesn't charge late fees either.

How Do I Contact Discover?

Discover services each of its private student loans itself. So if you have any issues or questions, you can reach out to them directly for assistance.

If you'd like to speak to someone over the phone, you can call 1-800-STUDENT (1-800-788-3368) anytime, 24/7. Or if you'd like to send an email message, you can do so after you've logged into your account online.

Is It Worth It?

Discover student loans have a lot going for them. They provide in-school payment flexibility, 6-9 month grace periods, and a high level of borrower protections after repayment begins. Plus, students with good grades can qualify for a 1% cash back reward.

However, Discover doesn't offer as many repayment terms as other lenders. And you'll have to submit to a full loan application before you can check your rates. If you'd like to see pre-qualified rate offers from multiple lenders in minutes without impacting your credit score, we recommend using Credible.

Currently, Credible is running a special promotion for The College Investor readers. Simply use our link and you could earn up to $1,000 gift card bonus when you refinance with one of Credible's partner lenders.

Discover Student Loans Features