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Discover Student Loans Review 2014

Michael Lux Blog, Student Loan Reviews, Student Loans 10 Comments

With college costs at record highs and 1 in 5 graduates delinquent on their students loans, it has never been more important to be smart about picking student loans.  One company attempting to make life with student loans a little bit easier is Discover.  Though the Discover student loans do suffer from the same shortcomings as all private loans, they do offer a couple features to separate themselves from the competition.  One feature, the graduation reward, makes these loans especially attractive.

The Basics

Discover offers a wide variety of student loans.  They offer fixed and variable rate student loans, with the fixed rates currently starting out at 6.74% APR and the variable rate loans as low as 3.25% APR.  Loans are offered for undergraduates and graduates, with special programs for health professionals, law students, and MBA students.  Undergraduates can borrow up to $100,000 and the limits for graduate programs are higher.  These loans can be used for tuition, housing, and books.  The length of repayment varies based upon the total amount borrowed.

Discover advertises that their loans have zero fees.  This includes a 0% loan origination fee.  They also do not require any payments while the student is still in school.

The Advantages

The biggest advantage to Discover student loans is their graduation reward.  Students who complete their degree get a one time check from Discover when they complete their program of study.

The way it works is fairly simple.  If the student completes the program after 90 days but before 6 years, and their loan is current, they get paid to graduate.  Students can get the money via electronic deposit to an account of their choice, or they can apply it as credit to their account.

Example: The graduation reward is 2% of the principal balance.  This means if that a student has $20,000 in discover student loans, when they graduate they will get $400 from Discover.

Though 2% of the principal may not seem like much, it is money at a time when a recent grad may need it most.  Transitioning between college and the real world can be difficult, and expensive.  Having a graduation reward also provides students with an additional incentive to complete school.

At present, Discover is the only student lender to offer a graduation incentive.  However, Discover only offers this program to people who select variable rate loans.

Another advantage, offered by Discover and many other lenders is the auto-debit discount.  If you sign up for automatic withdrawals from your bank account each month, discover will lower your APR by .25%.

Discover also offers 24/7 customer support for their student loans, a feature not offered by most lenders.


Discover private loans still suffer from the same disadvantages that apply to all private lenders.  Even with the graduation reward, Federal government loans are still a better alternative for most students, largely because the Federal loans have the most forgiving repayment plans.  Therefore, students should first maximize FAFSA funds prior to selecting any private loan.

Discover also lacks a co-signer release program with their student loans.

Bottom Line

Discover private loans are not without their flaws, but they do offer some of the lowest rates currently available, have no origination fees, and they are the only ones to offer a graduation reward for students.

Click here to learn more and find out your interest rates with Discover.

  • For some reason all of these “gimmicks” with cash back on student loans (or even things like return of premium life insurance) make me nervous that people are going to end up getting in more debt for the perceived benefit. Interesting though.

    • Good point. There is certainly that danger. However, hopefully someone who took the time to research student loans to this level of detail would be smart enough to realize that the graduation reward doesn’t justify borrowing more than absolutely necessary.

  • Holly Johnson

    Interesting! I’m happy to report that we don’t have student loans anymore. But if we did, I would be thankful for any program that helped me save.

  • Kevin Batten

    So if one does not qualify for any other type of assistance, only scholarships and private loans, would this be the only option to pay for school. This is my case. I am currently studying for the LSAT. Can this type of loan really pay for the entire cost minus scholarships?

  • MVH

    I have had many problems with Discover Student Loans. On several occasions they have not sent out bills or have not received payments and then blame those things on the US Postal Service. Considering I have never had problems with the USPS losing mail to or from any other company, I am thinking this is a statistical impossibility. Discover refuses to acknowledge the possibility that it is highly likely that it is THEIR fault. I am seriously considering taking out a personal loan at more than double the interest rate just to pay off the remainder of the loan and never have to deal with them again. Beware of Discover Student Loans.

    • Ron

      Why don”t you just pay online and print your confirmation. It makes no sense to pay double the interest or blame discover when with todays technology, you can have auto pay or go online and make a payment in less than a minute. Also your payment should be do the same time every month, you dont need a bill to pay it. Lets all have some personal responsibility.

  • Mark A

    I would never use Discover Student Loans again. I am able to purchase a house with my credit, however Discover will not approve me to co-sign for my son’s loan because of a flaw in there automated credit approval.

  • Julia Lenhard

    I am paying back my sons student loans. 2 months in a row they have applied the payments incorrectly making it seam like some of the loan was not paid. It has taken much time and aggravation to fix it. They are not to be trusted.

  • Niyimah Tinsley

    Do not use Discover for student loans ever! I applied for a loan at halftime for 4200 my school cancelled a class and I had to take it at another school so I am less than half time at two separate schools they said I could get both loans for both schools and ran my credit for a second time! But I couldn’t get the loan because I am less than half time at both schools but they know this! So I tried to see if they could remove it from my credit report since it should have never been ran again they gave me the run around and told me no because I gave them permission even though I did not qualify for the loan! I don’t understand what the big issue was all they had to do was send a letter stating it was a mistake but they acted like nothing was done wrong! Never Ever use them use sallie mae it’s cheaper and I got a lower interest rate discover was about to get 10,000 grand out of 4200 and I only have to pay back 5000 for 3000 major difference !!