Discover Exits Student Loan Business |  Student Loans and Counseling

Discover Exits Student Loan Business | Student Loans and Counseling

Key Takeaways

  • Discover will stop accepting student loan applications starting February 1, 2024.
  • Discover plans to sell your student loan business.
  • Existing Discover Student Loan borrowers should be aware of any changes.

Discover Financial Services will no longer accept student loan applications starting February 1, 2024, after announcing in November 2023 that it will sell its portfolio of student loans and transfer the servicing of those loans to a third-party provider. Currently, existing customers of Discover Student Loans should not expect any changes.

If you’re considering Discover for your personal student loan needs, you may want to consider other options.

He cited regulatory issues when announcing his decision to pull out.

As for current Discover Student Loans customers, they should keep a close eye on the news and watch for any communication from Discover, says Matt Newlin, a higher education consultant in St. Louis.

“My first thought is that this is potentially going to be very disruptive to borrowers,” Newlin said. “The student loan process is quite confusing because the loan servicer sells the loan portfolio, making the process more opaque.”

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Explore Student Loan Alternatives

Federal loans are often the best option for borrowers, but private student loans can help bridge financial gaps.

Refinancing student loans

If you’re a current Discover Student Loans customer, refinancing with a new lender can help alleviate some of the anxiety associated with the unknown. Refinancing your private student loan can result in a lower monthly payment with a better interest rate.

Once approved, your new student loan lender will pay off your existing debt and your loan balance will be transferred within a few weeks with the new interest rate and terms.

Private Student Loan Options

If you’ve exhausted your federal student loan options and are considering Discover to help fill any financial gaps, make sure you have no other options. “Before taking out any loans, be sure to exhaust federal/state grants, institutional and private scholarships, work study/assistant positions, payment plans, and more,” says Newlin.

That being said, there are several types of personal student loans that you can choose from depending on your needs:

If you decide that a private student loan is a necessity, be sure to consider more than just the interest rate and only borrow what you need.

“Your financial aid office is there specifically to advise students on this,” Newlin said. “Speak with a financial aid counselor to compare loan terms, amount required, repayment options, etc. to understand what your best borrowing option really is.”

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