Discover Student Loans Review: Special Programs and Cash Rewards

Here are the pros and cons of using Discover loans for college.

The cost of college continues to rise, and paying for it can be a real challenge. Even if you have saved for tuition, earned scholarships and qualified for financial aid, you might still have to take out a school loan to pay the bill.

A variety of student loan providers exist, such as Discover Bank, an online-only bank. Best known for the popular Discover Card credit card, the bank also offers a host of other banking products and services, including student loans. When looking for the best student loans, the Discover Student Loans website is a treasure trove of information on options to pay for college, how to find scholarships and how to get a student loan.

So you can better decide whether this financing option is right for you, here’s a review of Discover student loans:

Discover Student Loan Review

Discover offers college loans for students who are enrolled in undergraduate and graduate degree programs. In addition, the online bank offers special programs for graduate students seeking master’s or doctorate degrees in the health professions, for MBA candidates and for students in law school.

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Undergraduate Discover loans are available for up to 100 percent of the school-certified cost of attendance. To be eligible, you must be enrolled at least half-time and seeking an associate’s or a bachelor’s degree from an eligible school. Undergraduate student loans must be paid within 15 years after the deferral period, which is six months after graduation.

Graduate students can also borrow up to 100 percent of the cost of attendance if they are enrolled in a master’s or doctoral program. Special programs for health professionals let you borrow for residency and internship costs, including relocation and board review. Graduate student loans have a 20-year term and a grace period of nine months after graduation.

Discover student loans also offer consolidation loans that you can opt for if you have other private or federal student loans. With a consolidation loan, you will make a single monthly payment and your interest rate might be lower. Consolidation loans are available for 10-year or 20-year terms.

Before choosing to consolidate your current loans, compare the interest rates and benefits offered by Discover loans. Note that any features and benefits that currently apply to any federal loans you might have will not apply if you consolidate those loans with Discover.

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Find Out: How to Get the Best Student Loan Interest Rates

Discover Cash Bonus for Good Grades

Discover offers a one-time cash reward equal to 1 percent of the amount of each qualifying school loan if you have a GPA of 3.0 or higher at the end of the term. For example, if you borrow $10,000 for one semester, and you get at least a 3.0 GPA for that semester, you can redeem a cash reward of $100. You must redeem your reward within six months of the end of the semester.

Advantages and Disadvantages of Discover Student Loans

When considering whether you should choose Discover as your student loan provider, it’s helpful to weigh the pros and cons of the products and services offered. Here’s what you need to know:


  • No application, origination or late fees
  • Can borrow up to 100 percent of the school-certified cost of attendance
  • A cash reward for good grades
  • 0.25 percent interest-rate reduction for enrolling in autopay
  • No prepayment penalty


  • Shorter repayment terms compared with other loan options
  • Higher interest rates than some other lenders
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For example, the lowest available interest rate for a fixed-rate undergraduate Discover loan is 6.49% APR.  Sallie Mae fixed student loan interest rates start at 5.74% APR.

Paying Your Discover Student Loan

Discover Loans offers two options to repay your student loans. You can begin paying your loan while you’re still in school, paying $25 per month. After graduation, you would begin making larger payments so that your loan would be paid off 15 years after graduation. Or, you can wait until you graduate, take advantage of the six-month grace period, and then begin making your payments. You would still have to pay off your loan in 15 years.

Weighing the Costs of a Discover Student Loan

Before you commit to years of payments for a Discover student loan, consider how much it will cost you in interest over the life of the loan. Here’s an example that illustrates the difference between the two Discover loan payment options:

Assume you borrow $10,000 for your first semester of freshman year as an undergraduate. You get a fixed-rate loan at 6.49% APR, which was the lowest available rate for a Discover Undergraduate Loan as of March 29, 2018.

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Choose to begin paying right away, and you could pay $25 per month for the next four years. After you graduate, your monthly payment would be $110.17. You would pay a total of $19,280 in loan payments.

Choosing to defer making your Discover loan payments until six months after graduation would make your monthly payment $111.05, and your total payments would be $19,989.

It’s worth noting that if you only qualified for the highest available fixed rate of 11.99% APR, and you deferred your payments until six months after graduation, you would pay a total of $32,584 for that same $10,000 loan.

Comparison Shop: 10 Best Private Student Loans

Student loans are a helpful resource to help pay for college, and Discover student loans offer several advantages. Before deciding to take out a Discover loan, however, be sure to research scholarships and financial aid options, and shop around for the loan that offers the best rates and benefits for your particular situation.

This content is not provided by Discover Bank. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone and have not been reviewed, approved or otherwise endorsed by Discover.

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About the Author

Karen Doyle

Karen Doyle is a personal finance writer with over 20 years’ experience writing about investments, money management and financial planning. Her work has appeared on numerous news and finance websites including GOBankingRates, Yahoo! Finance, MSN, USA Today, CNBC,, and more.

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