Discover student loan refinancing review October 2018 | finder.com

Discover student loan refinancing review

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Don’t let student loans put your life on hold. Consolidate with this lender for more flexible repayments.

Are your private student loan payments keeping you from going back to school or taking a risk in your career? You might want to consider refinancing with Discover. While this lender’s rates are on the high end, you have a variety of choices for pausing or reducing repayments while you explore your career options. Read on to learn if Discover is the right option for you.
Product NameDiscover Private Consolidation Loan
Min Loan Amount$5,000
Max. Loan Amount$150,000
APR4.12%–11.87%
Interest Rate TypeVariable
Minimum Loan Term10 years
Maximum Loan Term20 years
RequirementsMust be a US citizen or permanent resident with a US address, good credit standing, no more than $150,000 in student debt, verifiable income, and the primary borrower on all loans up for consolidation.
  • Age 18 or older
  • US citizen or permanent resident
  • US address
  • Good credit standing
  • Maximum $150,000 in student debt
  • Verifiable income
  • Primary borrower on all loans up for consolidation

First, am I eligible?

To qualify for Discover student loan consolidation, you must:

  • Be a US citizen or permanent resident
  • Have an address in the US
  • Be older than 18
  • Have good credit
  • Have no more than $150,000 in student debt
  • Have verifiable income
  • Be the primary borrower on all loans you want to consolidate
  • Have eligible student debt

If you have medical school or law school debt, you may be eligible for a higher consolidation loan amount.

Keep in mind that you have to meet all eligibility requirements on your own, without the help of a cosigner. While you can have a cosigner on your application, they only come into play after you’ve been approved to help you qualify for lower rates.

Types of student debt you can’t refinance with Discover

  • Post-graduate loans. Any financing used after you finished your degree, like for a bar study course.
  • Loans originated outside the US. If you took out a student loan from a foreign lender, you can’t refinance it through Discover.
  • Loans for less than half-time enrollment. What qualifies as half-time depends on your school.
  • K-12 loans. No loans you (or your parents) took out to pay for a private school.
  • Loans that weren’t used for qualified education expenses. It must be used for education expenses, like housing.

How does consolidating with Discover work?

Discover is a direct lender that offers student loan consolidation for both federal and private loans. Since it has no limits on how many loans you can consolidate, you can technically use this loan to refinance one student loan.

Consolidating and refinancing any student loan is often a drawn-out process and Discover is no exception. While filling out the application and getting conditional approval only takes around 15 minutes, it can take as long as 45 days before Discover disburses your funds. Luckily, the entire process takes place online.

What happens if I consolidate my federal loans with Discover?

While Discover offers the option of consolidating your federal and private student loans, it might not be a great idea. Federal student loans typically come with rates lower than even Discover’s lowest APR. You’ll also lose access to potentially valuable benefits like income-based repayment plans.

How much will I pay to refinance?

Nothing at first. In fact, you should technically start saving on your student loan repayments once you refinance with Discover. It charges absolutely no fees — even if you’re late or an automatic payment doesn’t go through. Its interest rates are, however a bit on the high end.

Like with many other student loan refinancing providers, Discover offers both variable and fixed interest rates. Discover’s variable interest rates currently range from 4.12% to 7.37%, though they change every three months. You’ll get an interest rate anywhere between 5.24% and 8.24% if you go for the fixed option.

Discover calculates variable rates by adding between 2.49% and 5.74% to the three-month LIBOR rate — a baseline interest rate many student lenders use to come up with variable rates.

Does Discover offer any discounts?

Discover offers a 0.25% reduction on your interest rate to borrowers who sign up for auto pay. Servicemembers also have rates capped at 6% while they’re on active duty, as per the Servicemember’s Civil Relief Act (SCRA).

Repayment options

Discover only offers one standard plan, where you pay the same monthly repayment until you’ve paid off your loan.

However, it does offer several payment assistance options for pausing or reducing your student debt due to special circumstances.

  • Deferment. Postpone your repayments while you go back to school, are on active military duty, are working for a low-paying public service organization or are completing a medical residency.
  • Early repayment assistance program. Hold off on repayments for the first three months of your loan term.
  • Payment extension. Make three monthly repayments in a 90-day period to make your loan repayments up-to-date. You must have repaid at least six months of your new loan, and not have been in forbearance for the past six months with loans that are over 60 days delinquent to qualify for this option.
  • Reduced payment. If your loans are less than 60 days late, you can make reduced repayments of at least $50, similar to interest-only repayments, for an initial period of six months.
  • Forbearance. If you’re going through a verifiable economic hardship like unemployment or a medical disability, you might qualify to put your repayments on hold for as many as 12 months, though not all at once.
  • Hardship. If you’re experiencing economic hardship you can also reduce your repayments to as low as $50 for up to 12 months.

Top 5 reasons to consider Discover

  • Repayment assistance options. If you’re struggling to make repayments or need a pause for educational or professional reasons, Discover offers several different repayment assistance programs that go beyond the standard deferment or forbearance.
  • No fees. Discover doesn’t charge application, origination, prepayment or even late or nonsufficient funds fees.
  • Right-to-cancel period. You have a three-day period after the final disclosure to cancel your consolidation loan without any penalty.
  • Auto debit reward. You can get 0.25% off of your interest rate by signing up for automatic payments.
  • Educational resources. Discover has lots of resources for borrowers at any stage of refinancing — or taking out a student loan for that matter. It also has calculators to help you estimate your monthly payments or how much you could save by paying your loan off early.

Why you might want to look elsewhere

  • Can’t refinance postgraduate loans. Loans you took out to take the bar or to cover relocation costs for a residency aren’t eligible for consolidation with Discover.
  • Long turnaround time. It could take as long as 45 days after you submit your application before Discover disburses your funds.
  • Relatively high rates. Compared to other student loan providers, Discover’s rates are at least a few points higher.
  • Lack of transparency on credit requirements. While you’ll have to meet certain debt-to-income ratio and credit requirements, Discover doesn’t disclose what these might be before you apply.

Compare more student loan refinancing options

Rates last updated October 22nd, 2018
Name Product Min. Credit Score Max. Loan Amount APR Product Description
Credible Student Loan Refinancing
Good to excellent credit
None
2.57%(As low as ) (variable)
Get prequalified offers from top student loan refinancing providers in one place.
SoFi Student Loan Refinancing Variable Rate (with Autopay)
650
full balance of your qualified education loans
2.480% – 6.990% (variable)
A leader in student loan refinancing, SoFi can help you refinance your loans and pay them off sooner.
Purefy Student Loan Refinancing
620
$300,000
2.72%–9.66% (variable)
Refinance all types of student loans — including federal and parent PLUS loans.
Earnest Student Loan Refinancing Variable Rate (w/ autopay)
650
None
2.47% to 6.23% (variable)
Get a tailored interest rate and repayment plan with no hidden fees.
PenFed Student Loan Refinancing
700
$300,000
3.75%–7.03% (fixed)
Straightforward refinancing with competitive rates.
CommonBond Student Loan Refinancing
660
$500,000
2.72%–7.25% (with autopay) (variable)
Trade in your existing school loans for competitive APRs that come with a discount for autopay.
LendingTree Student Loans
Good to excellent credit
Varies by lender
3% (As low as) (fixed)
Compare multiple student loans and student loan refinancing options in one place.

Compare up to 4 providers

What do borrowers say about Discover?

Customers have had a mixed experience with Discover, though most online reviews of the company are of its credit card. It gets an A+ rating from the Better Business Bureau (BBB), despite 861 customer complaints filed against the company, mostly involving problems with Discover’s product or service. Nearly 90% of its 51 reviews on the BBB site are negative.

It doesn’t do quite as well on Trustpilot, scoring an 8.3 out of 10 based on 10 reviews. The few forum discussions out there on Discover Student Loans highlighted its comparably high interest rates and therefore high cost. Some also had trouble working with its customer service team, while others were pleased — not uncommon with such a high-volume company.

What to expect when signing up

Filling out Discover’s online application only takes around 10 to 15 minutes. Here’s how:

After you apply

Wait for a notification telling you if you have preliminary approval and asking you to submit documentation. These might include:

  • Your most current W-2 form
  • Your two most recent pay stubs
  • A copy of your transcript or diploma

Wait for Discover to process your loan and verify your information. Review your promissory note carefully before signing it. You can cancel your loan without penalty within three days of signing your documents. Wait for Discover to disburse your funds.

The whole process typically takes between 30 and 45 days from start to finish. After your funds are disbursed, you’ll start making repayments through its servicer, Great Lakes Higher Education Corporation.

More about Discover

Although Discover is probably best known for its credit cards, Discover Student Loans is a division of Discover Financial Services that has been around for nearly 60 years. The student loans division also offers private undergraduate, graduate, MBA and health professional, law, residency and bar exam loans.

Read our review of Discover private student loans

Bottom line

Refinancing with Discover might not save you as much as other lenders. But it offers one option that many don’t: flexibility. Its multiple repayment assistance programs let you explore education and career opportunities by putting repayments on hold — or at least reducing them to something more affordable.

Curious about other refinancing options? Check out our student loans refinancing page to compare lenders and learn more about how refinancing works.

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