Discover is best known for its role as a top-four credit card network in the United States, but it does a lot more these days than helping you pay with plastic. In addition to a bank, Discover also grew to offer student loans at competitive rates. Variable rates range from 3.37 to 11.87% APR and fixed rates go from 4.74 to 12.99% APR. Loans come with 15-year or 20-year terms with no flexibility. Cosigner beware, there is no cosigner release available at Discover.
Overview: This online-only lender, which was founded by former Sallie Mae executives, distinguishes itself with increased flexibility. Borrowers can expect greater in-school and post-school repayment options than what’s found elsewhere. Also, students and parents alike will appreciate perks, such as no fees and low rates, in spite of a slow path to cosigner release.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 1.9299999999999997% effective October 10, 2019.
If you have no income and either no credit or bad credit, you’ll need a co-signer to get a private student loan. Without bills in your name, such as a credit card, car loan or utility, you have no way to demonstrate that you can pay bills on time. Your co-signer will need to have a steady income as well as good to excellent credit scores, typically at least in the high 600s. Signing with a co-signer means they’re on the hook for your loan bill if you can’t pay.
Private student loan volume grew much more rapidly than federal student loan volume through mid-2008, in part because aggregate loan limits on the Stafford loan remained unchanged from 1992 to 2008. (The introduction of the Grad PLUS loan on July 1, 2006 and the increases in the annual but not aggregate limits had only a modest impact on the growth of private student loan volume. The subprime mortgage credit crisis of 2007-2010, however, limited lender access to the capital needed to make new loans, reining in growth of the private student loan marketplace.) The annual increase in private student loan volume was about 25% to 35% per year, compared with 8% per year for federal loan volume.
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