Discover Financial Services will no longer accept student loan applications as of Feb. 1, 2024, after announcing in November 2023 that it was going to sell its student loans portfolio and transfer the servicing of these loans to a third-party provider. For now, current Discover Student Loans customers shouldn’t expect any changes.
If you were considering Discover for your private student loan needs, you might want to think about other options.
[Read: Best Private Student Loans.]
Discover cited regulatory issues in announcing its decision to exit.
As for current Discover Student Loans customers, they should follow the news closely and watch for any communication from Discover, says St. Louis-based higher education consultant Matt Newlin.
“My first thought is this is, potentially, going to be very disruptive for borrowers,” says Newlin. “The student loan process is confusing enough as it is without the loan servicer making the process more opaque by selling their loan portfolio.”
Discover Student Loans Alternatives
Federal loans are often the best option for borrowers, but private student loans can help to cover funding gaps.
Refinancing Student Loans
If you’re a current Discover Student Loans customer, refinancing with a new lender might help to alleviate some concerns about the unknown. Refinancing your private student loan could also result in a lower monthly payment with a better interest rate.
Once you’re approved, your new student loan lender will pay off your existing debt and your loan balance will be transferred within a few weeks — with a new interest rate and terms.
[Read: Best Student Loan Refinance Lenders.]
Private Student Loan Options
If you’ve exercised your federal student loan options and were considering Discover to help fill any funding gaps, make certain you have no other recourse available. “Be sure you’ve exhausted federal/state grants, institutional and private scholarships, work-study/assistantship positions, payment plans and more before you borrow any loans,” says Newlin.
That being said, there are several types of private student loans you can choose from, depending on your needs:
— Degree-specific loans.
— International student loans.
— State-specific loans.
— Parent loans.
If you decide a private student loan is a necessity, make sure to consider more than just the interest rate, and only borrow what you need.
“Your financial aid office is there specifically to help counsel students on this issue,” says Newlin. “Talk with a financial aid counselor to compare loan terms, amount needed, repayment options, etc., to understand what is truly your best option for borrowing.”
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Discover Is Exiting the Student Loan Business originally appeared on usnews.com
