Discover Student Loan Refinancing Review

Matt is a Certified Financial Planner® and investment advisor based in Columbia, South Carolina. He writes personal finance and investment advice, and in 2017 he received the SABEW Best in Business Award.

In addition to its well-known credit card business, Discover offers a wide variety of student loans, including new loans for undergraduate and graduate students, health professions and residencies, law and business students, and more.

Discover offers student loan refinancing, which it refers to as its Private Consolidation Loans. In this review, we’ll dive into the pros and cons of Discover’s refinancing loans, and other things borrowers need to know before applying.

Provider Rates & Terms Great For Get Started

Discover student loan refinancing

Rates & Terms:

Fixed Rates: 5.74 - 8.49%

Variable Rates: 4.74 - 7.74%

Terms: 10 and 20 years

Great For:
  • High limits
  • Get a 0.25% auto-pay discount

What I like about Discover refinancing loans

  • Autopay discount -- Discover offers a 0.25% rate reduction for borrowers who choose to auto-pay their loans from a bank account. This has become a pretty standard benefit in the industry, but is still worth noting.
  • No fees -- Discover student loans have no application or origination fees. There are no late fees either.
  • Federal and private loans -- Discover will refinance all eligible federal and private student loans.
  • High limits -- As long as your credit is approved, Discover will refinance all of your eligible education loans (although the company does say that “maximum limits may apply”).
  • May use a cosigner -- If a borrower feels that it will strengthen their application, they can choose to apply with a cosigner.
  • In-school deferment -- Discover allows borrowers to defer their loan payments if they choose to go back to school and enroll at least half-time. Discover also permits deferments when borrowers are on active military duty, in certain types of public service positions, and when in health professions’ residency programs.
  • Repayment flexibility -- Discover has a well-deserved reputation of working with borrowers during times of financial hardship.

Why you can trust me

I’m a Certified Financial Planner® who has published more than 4,500 articles on various personal finance and investment topics, and my work has been syndicated on news outlets such as MSN Money, USA Today, CNN Money, and more. In addition, I’m a highly experienced student loan borrower myself (14 individual loans throughout undergrad and grad school and one federal direct consolidation loan) who has extensive firsthand experience with the student loan borrowing, repayment, and refinancing processes.

Drawbacks of Discover refinancing loans

  • Higher APR range -- While some borrowers are indeed likely to reduce their interest expense with Discover’s refinancing loans, there are several other private refinancing lenders who offer significantly lower APRs to borrowers with strong credit.
  • Only two term choices -- Discover's refinancing loans only come in two term lengths, 10 years or 20 years. Several competitors offer five or more different term lengths to choose from.
  • Hard credit pull -- Discover doesn’t have an option to check your APR on a refinancing loan without pulling your credit. Therefore, applying for a Discover refinancing loan could negatively impact your credit score

What is student loan refinancing?

Student loan refinancing means obtaining a new student loan in order to pay off your existing loan(s). Your new loan will have a new APR and other loan terms that are determined by your credit history, income, and other qualifications. In fact, the primary reason to refinance student loans is to lower your interest rate. Refinancing can also make repaying your student loans more convenient by trading several payments for just one.

What to look for when refinancing student loans

By far the most common reason student borrowers choose to refinance their student loans is to save money on interest. While it doesn’t happen in all cases, borrowers with strong credit often achieve substantial interest rate reductions when they choose to refinance.

In addition, there are a few other factors to consider. For example:

  • Does the lender charge an origination fee? 
  • Is there an additional cost to prepay your loan? 
  • If you experience financial hardship, can you defer repayment on your loan for a certain length of time?

This isn’t an exhaustive list by any means, but are some things to keep in mind as you shop for a refinancing loan.

How to refinance your loans with Discover

You can apply for Discover’s student loans rather easily. The company claims its loan application takes 15 minutes or less. Once approved, you select your interest rate type (fixed or variable), enter the details of the loans you want to consolidate, and sign and accept your loan.

When it makes sense to refinance with Discover

My take is that Discover is a good refinancing option, but it isn’t the best for everyone. Borrowers with top-notch credit, in particular, could potentially get lower APRs by reviewing the best student loan refinancing lenders. Having said that, for many student loan borrowers, Discover’s refinancing loans are a good option to consider.

Discover could be an especially good option for borrowers who may eventually go back to school, as the ability to defer payment of their loans while enrolled in say, graduate school, is a nice feature.

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