Discover Student Loan Refinance Review

Last Updated: June 3, 2021 by Melanie Hanson

Our Rating: D+

Loan Limits $5,000 – $150,000
Fixed Rates 3.49% – 6.99%*
Variable Rates 1.87% – 5.87% (18.00% Cap)
Terms 10 or 20 years
Min. Credit Score Undisclosed

*Lowest rates always include the 0.25% interest reduction for enrolling in auto-pay.

Skip to: Rates & Fees | Eligibility Requirements | Repayment Options | Consumer Reviews & Complaints | FAQ

Discover Bank is a major financial servicer best known as the current issuer of the Discover Card. Discover offers checking and savings accounts, personal loans, home equity loans, student loans, and credit cards.

Loan Refinancing Options
Private student loans
Private parent loans
Federal student loans
Federal Parent PLUS loans (in parent’s name only)

Discover Refinance Rates & Fees

Discover’s fixed rates are between 3.49% and 6.99%. Variable rates are between 1.87% and 5.87%. Lowest rates always include the 0.25% interest reduction for enrolling in auto-pay.

Refinance Loan Rates
Terms Fixed Rate Variable Rate
10 or 20 Years 1.87% – 5.87% 3.49% – 6.99%

Additional information about Discover refinance rates:

  • Discover does offer a discount for setting up auto-pay: 0.25% interest rate reduction.
  • Variable rates are based on the 3-month LIBOR (0.13% as of this writing) as published in the “Money Rates” section of The Wall Street Journal fifteen (15) days prior to the interest rate change date.
  • Variable rates are capped at 18.00%.
  • Discover Bank discloses that “Discover may sell or transfer a refinance loan to another institution at any time.” Such a transfer may impact a loan’s APR.

Student Loan Refinancing Calculator

Based on advertised rates, use the calculator below to determine what your new monthly payment and potential savings may be if you refinance with Discover.

Additional Fees

Beyond interest rates, there are a number of fees a refinance lender may charge up-front or during the loan servicing period. Below is a list of these fees that Discover does or does not charge.

Fee Type Amount Charged
Application Fee None
Loan Origination Fee None
Disbursement Fee Undisclosed
Prepayment Penalty None
Late Payment Fee None
Returned Payment Fee None
Collection Fee Undisclosed
  1. Application fee – fee to apply for rates & approval.
  2. Loan origination fee – fee to create the new loan.
  3. Disbursement fee – fee for distributing funds to lenders to pay off loans that have been refinanced.
  4. Prepayment penalty – fee for making extra payments to reduce a refinance loan balance or pay it off early.
  5. Late payment fee – fee for making a late payment.
  6. Returned payment fee – fee for failed payments due to insufficient funds, also known as a “bounced check”.
  7. Collection fee – fee for collection activity on a defaulted debt.

Current Promotions & Offers

Borrowers receive $100 for every qualified referral that results in a new loan or line of credit. The person who was referred also receives $100 if they do not have any prior or existing loans with Discover. The program limits referral bonuses to $400 per calender year.

Discover Refinance Eligibility Requirements

To qualify for refinancing with Discover, all borrowers must meet the criteria below.

  • Citizenship Requirement: U.S. citizenship or permanent residence -OR- a creditworthy, qualified co-signer.
  • Income Requirement: proof of income required, no minimum specified.
  • Credit Score Requirement: undisclosed minimum credit score.
  • Graduation Requirement: none.
  • Location Requirement: unspecified.

Additional restrictions apply for specific individuals and loans.

  • Payments must be made from a U.S. bank account. Sending cash payments is not allowed.
  • $50 minimum monthly payment.
  • If a loan enters default, the entire outstanding balance is immediately due.

Discover Student Loan Repayment Options

Lenders vary greatly on the benefits and options provided to borrowers during the loan servicing period. Additionally, benefits may only be available on a case-by-case basis. Discover offers some relief options.

Deferment & Forbearance

Discover offers more opportunities for deferment and/or forbearance than most other lenders. They also offer unspecified repayment assistance.

See Discover’s conditions for deferment and forbearance below.

Condition Coverage
Returning to grad school (at least half-time) Deferment
Disability rehabilitation Undisclosed
Active military duty Deferment, up to 36 months
Involuntary unemployment Forbearance, up to 12 months
Economic hardship Forbearance, up to 12 months
Natural disaster Undisclosed
Temporary hardship Unspecified
Health profession residency Deferment, up to 60 months
Public service* Deferment, up to 36 months

*Minimum of 6 months service in any of the following organizations: National Oceanic and Atmospheric Administration (NOAA), Peace Corps (ACTION Program and Tax-Exempt Organization Volunteer), AmeriCorps, Red Cross, US Public Health Service Commissioned Corps, US Department of State (Fulbright Program).

Additional Options

Discover may offer other opportunities for relief or contract modification.

  • Discover’s Early Repayment Assistance Program is for students within their grace period or the first 3 months of repayment.
  • Payment Extension is for loans that have been in repayment for more than 6 months, are 60 or more days delinquent, and have not been in forbearance for the past 6 months; students may return their loan’s status to current by making 3 minimum monthly payments (or the equivalent amount of 3 minimum monthly payments) within a 90-day period.
  • Reduced Payment is for loans less than 60 days delinquent; the minimum monthly payment is reduced to an amount greater than or equal to the monthly interest amount, but less than a full monthly principal & interest payment, subject to a $50.00 minimum, for an initial period of six months.
  • Co-signer release is not an option at Discover.
  • Death / disability discharge is available in the unfortunate circumstance that a borrower passes away or suffers total permanent disability.
  • Temporary interest rate reductions may also be available to borrowers under economic hardship.
  • Discover has a standard Private Loan Deferment Request form.

Discover Reviews, Complaints & Lawsuits

Beyond our own findings, our team also collected the most genuinely insightful customer experiences we could find, including any instances of legal action against the company in which the details became public.

Discover Online Reviews

Below are 3 samples of Discover customer reviews we found on public forums, included here for their value as unedited, uncensored, and unsolicited user experiences. Note that these reviews are unverified, may include inaccuracies, and may provide outdated information (about rates, bonus offers, etc.).


“They’re fine. The website is better than it used to be. Auto-pay works fine without any hassles. Doesn’t sync to Mint very well. Often have to re-enter the security questions and sometimes still won’t connect for a day or two … but that’s possibly on Mint’s end too.

The thing you need to understand is that they are Private loans. Which means that you are agreeing NOW to a set repayment schedule when you graduate. An interest rate and a term. That defines the minimum payments. People often post here about how their private loan lender is demanding that they pay a particular number and refuse negotiate. They have NO obligation to “work with you” and are in fact prohibited from changing the loan terms on you.

If you’re borrowing a small amount and you get a reasonable degree and a decent job private loans can be fine. Just try to limit them as much as possible..”ANGR1ST on reddit, 6/17/2019


“For 3 months in a row I have had difficulty paying the loan on line and have had to call them up to make payments. As a cosigner, I do not have as much information about the loan as the borrower such as details about payments etc. I have been paying the loan for the person who stopped paying but I feel like I am seen as a money bag by discover and treated as a second class borrower by them. I hate it taking me an hour to make a payment each month. Why cant they just fix their online problems.”Julia Lenhard on The College Investor, 11/21/2017


“As a current Discover student loan borrower, I would strongly advise against using them to finance anything. Their communication and customer service is deplorable. I am still waiting (since November) for a hard copy of my payment history, which seems to have been altered online. Federal loans, if needed, are the way to go.”spelnsane on MyFico, 1/28/2015


More (unfiltered) customer reviews of Discover are available at TrustPilot.com (1.7 out of 5) and ConsumerAffairs.com (3.9 out of 5).

Discover CFPB Complaints

As consumer finance companies, student loan refinancing lenders fall under the jurisdiction of the Consumer Finance Protection Bureau (CFPB), a federal agency. As part of their mission, the CFPB allows consumers to log official complaints. These complaints are publicly available on the CFPB official website.

Since 2012, consumers have submitted 15,465 complaints about Discover Bank to the CFPB. Among these, 1,288 were related to student loan services; a further 1,781 were related to debt collection.

Discover averages 62 complaints for every corporate employee, or 1 complaint for every $783,800 of company revenue ($12.12 billion total). 5% of consumer complaints against private student lenders submitted to the CFPB are in regard to Discover Bank.

The allegations made in these complaints are unverified, are not necessarily representative of all consumers’ experiences with Discover, and may contain outdated information (about rates, bonus offers, etc.). Note that a lender with a large customer base is likely to also have a higher number of complaints when compared with smaller lenders.

Line Graph: Discover Bank Consumer Complaints, Public Complaints Filesd with the Consumer Financial Protection Bureau, limited to complaints specifically about student loans

Below we’ve included the 3 most recent complaints (as of this writing) in which the consumer consented to sharing their details. These samples are limited to complaints that specifically reference student loan services.


Complaint 4122933
2/7/2021
Maryland

“This is in regards to a student loan with Discover Bank. In XXXX, my co-signer filed chapter XXXX bankruptcy, putting this loan in default. I contacted Discover and learned how I could continue to make on time payments on the loan in good faith and in order to decrease the balance. The bankruptcy cleared in XXXX, and I contacted Discover to learn how I could pay the remaining balance of {$860.00} before it was sent to collections. I was advised where to mail payment. I requested something in writing stating that this payment would satisfy full payment of the loan. I was told that this was not possible, but that the account would be updated if I mailed payment. I promptly mailed a check, along with a letter requesting that someone send me documentation upon receipt confirming that this was payment in full. They cashed the check in XX/XX/XXXX ( see attached photo ) but they never sent me documentation of payment in full. I contacted them several times about this and was assured it would be taken care of. I continued to wait for documentation, only to find that after cashing my check for the balance, they reported the account as being in collections on my credit report and that there was an outstanding balance of {$860.00}. My credit took a substantial hit. No one in customer service could explain this or correct it. I was promised calls back after looking into things, and these calls never came. After all this, and 5 months later in XXXX of XXXX, they mailed me back a check for the {$860.00}. They never corrected my credit report. I contacted them again on several occasions and was instructed to reach out to someone named XXXX XXXX. I did so and she never returned my calls or emails sent on XX/XX/XXXX and XX/XX/XXXX. I did confirm with another Discover customer service rep named XXXX that the contact information was correct. I called and spoke with them more times than I care to count to resolve this, and no one could explain to me what the problem was or why they paid me back. They told me to mail another check, and I said I would do this if they could first a ) tell me what went wrong and the first time and b ) send me something in writing saying that payment of this amount would cover the balance in full and c ) fix their reporting to the credit bureau. They never did any of this, and I simply waited for the account to fall off my report, and took the hit to my credit. I again contacted Discover in XXXX of XXXX asking for documentation that I could pay the remaining balance and be done with this debt, but the customer service representative requested additional days to look into the issue, and never called me back. In XXXX of this year, XXXX, I was contacted by a collection agency for the balance of XXXX on behalf of Discover. I was concerned that paying this would reopen the account on my credit report, but certainly did not and do not trust anyone at Discover to give me a straight or accurate answer about this, as they so grievously misdirected me up to this point. I paid the collection agency the full balance promptly, in hopes that this will finally resolve what has been a very frustrating and unfortunate experience. I received legal advice to file this complaint in order to avoid any further damage to my credit. I will never bank with Discover for any purpose again for this reason, and hope that this might help someone else in a similar predicament.”


Complaint 4117345
2/4/2021
Massachusetts

“I had two loans totaling roughly XXXX charged off by Discover in XXXX of 2019. After talking with XXXX they agreed to place me on hardship payments. Discover neglected to tell me that the payments were only in place for three months. Discover made no attempt to contact me at any point from the end of these hardship payments. This XXXX, hoping to settle the balance, I called Discover. I spoke to an individual named XXXX, who informed me that Discover was willing to settle the account for a lower amount. Hoping to get the loan off of my account, I was incredibly motivated to reach an agreement. Unfortunately, Discover wanted roughly XXXX, which was more than I had at the time. I told Discover I would contact them within a week to let them know if I could make XXXX work on my end, while XXXX said she would try to get a lower settlement number. I since made numerous attempts to contact XXXX. Every time I was told that she was unavailable. I was hoping to specifically talk to XXXX, as me and her had built up a good report and I had had negative experiences in the past with other Discover personnel. Today, I again attempted to call XXXX. Instead, I was told by Discover that my debt had been sent to a collection agency with no notice. I talked to several representatives from Discover, including XXXX XXXX and her supervisor XXXX ( who was incredibly rude, arrogant and belittling ), and was told that there was nothing that could be done. I do not believe that Discover gave me proper notice before sending this debt to collections, and I believe that XXXX was purposefully unavailable in order to prevent me from settling the account. I am currently reaching out to whomever I can for assistance.”


Complaint 4098834
1/28/2021
District of Columbia

“In XXXX, I called Discover and asked for repayment assistance on my student loan. Discover offered no repayment assistance and the customer service representative gave me false information, saying I could ” pay one account at a time ” because ” Discover doesn’t report late payments to credit agencies. ” This false information clouded my understanding of their payment policies. On XX/XX/XXXX, after bringing my account current with a payment, I realized that my XXXX credit score decreased by 103 points, even though I’ve made 22 on-time payments. Discover ‘s zero-tolerance policy for repayment assistance and misinformation about payments and credit reporting severely damaged my credit rating.”


For a full list of the 15,465 complaints made against Discover in the CFPB’s Consumer Complaint Database, click here.

Discover Lawsuits

Discover Bank has been subject to dozens of lawsuits and federal investigations. We’ve included 2 of the most recent below as examples of Discover’s lawfulness and legal practices.

Note that while this information is updated regularly, ongoing legal action is subject to change.

Perez et al v. Discover Bank Case No. 20-CIV-03045

The Mexican American Legal Defense and Educational Fund (MALDEF) has brought a class action lawsuit against Discover Bank alleging the bank “imposed restrictions on student loan services based on immigration status”.[1][2]

Ongoing since July 2020, the civil complaint calls for injunctive and declatory relief and damages. Allegations are based on complaints that Discover denied one of their borrowers an opportunity to refinance at a lower rate, informing the borrower that her rejection was based solely on her immigration status.

MALDEF alleges violations of California’s Unruh Civil Rights Act, which explicitly prohibits businesses from discrimination based on, among other things, immigration status.”

The case has been assigned to Judge Susan Illston of the California Northern District Court and is ongoing.[3]

Consumer Financial Protection Bureau v. Discover Bank, Case No. 2020-BCFP-0026

In December 2020, Discover Bank – in conjunction with The Student Loan Corporation and Discover Products, Inc. – settled a lawsuit with the Consumer Financial Protection Bureau (CFPB). The company was fined $35 million following an investigation by the CFPB that found “Discover engaged in illegal debt collection practices”.[4]

The CFPB determined that Discover Bank violated the Consumer Financial Protection Act of 2010 (CFPA), the Electronic Fund Transfer Act, and Regulation E. Discover was also found to be in violation of a federal order issued in 2015.

Discover was ordered to pay a minimum of $10 million in consumer redress and a $25 million civil money penalty. The settlement between Discover and the CFPB includes requirements designed to prevent future violations.


Frequently Asked Questions

These are the most common questions consumers have about student loan refinancing with Discover.

  • Is Discover good for refinancing student loans?
    Discover may be a good option for someone who already has an account with Discover.
  • Are Discover loans federal?
    Discover loans are not federal. Discover has no affiliation with the federal government or the U.S. Department of Education.
  • Does Discover charge a prepayment penalty?
    There are no penalties for early payments or repaying a loan in full before its term is over.
  • Does checking your rates with Discover hurt your credit score?
    Discover does not offer prequalification, so applying for a refinance loan or private loan consolidation requires a hard credit check. In other words, the credit check will appear in your credit history and may influence your FICO credit score.
  • Is Discover a bank?
    Discover Bank is indeed a bank as well as a subsidiary of Discover Financial Services. In casual conversation, “Discover” often refers to the Discover Card, the third-largest credit card brand nationwide, which is issued by Discover Bank.
  • Can I refinance a Discover loan?
    You can refinance a Discover student loan or a student loan from another private lender. There is no limit to the number of times a borrower may refinance with Discover. Note, however, that every new line of credit requires a hard credit check that may affect your FICO score.
  • Can I refinance just some of my loans with Discover?
    Yes, you can refinance some, all, or just one of your qualifying student loans with Discover. You may choose to refinance your private loans only or refinance private and federal loans together.
  • Can I refinance loans that have already been refinanced?
    Yes, you can refinance loans as many times as you want with Discover. Note that each time you refinance, you will have to submit a new application; every application requires a hard credit check that may affect your credit score.
  • Can my spouse and I refinance our loans together with Discover?
    Discover does not allow spouses to combine their student loans when refinancing.
  • How long does it take to refinance with Discover?
    Refinancing with Discover takes between 9 and 20 weeks. Processing your application takes 30 to 45 days. Once you receive your approval disclosure, you will have 30 days to accept the loan terms (plus a 3-day right-to-cancel period). After an unspecified processing period, your first payment comes due 30 to 45 days following disbursement.
  • Who services Discover refinance loans?
    Discover does not disclose a third-party servicer, but its promissory note stipulates that “service providers (“Authorized Parties”) may contact you, including calls, text message or email, about any current or future accounts or applications, with respect to all products you have with us…”
  • Does Discover offer a grace period?
    Discover does not offer a grace period but may allow for a temporary forbearance when you refinance loans that are in a grace period.
  • How often do variable rates change?
    Discover updates variable rates once per fiscal quarter – that is, on January 1st, April 1st, July 1st, and October 1st – according to the 3-month LIBOR.
  • Can I get any special rates or discounts with Discover?
    Discover does offer a 0.25% interest rate reduction when you enroll in auto-pay. They also have a referral program and occasionally offer special bonus perks, which are listed on their web site.
  • What happens if I file for bankruptcy?
    Discover explicitly states in its promissory note that in cases of bankruptcy, the entire outstanding loan balance is immediately due.
  • Is Discover a Credible lender?
    Discover does not partner with Credible.

Compare Student Loan Refinance Reviews

Lender Rating
Advantage B+
BECU C-
Brazos A
Citizens Bank B-
College Ave A-
CommonBond A+
Discover D+
Earnest B+
EDvestinU B
Education Loan Finance (ELFI) A-
First Tech Federal C-
iHelp D
Laurel Road A-
MEFA B-
SoFi B-

Sources

  1. Perez v. Discover Bank Case No. 20-CIV-03045, Class Action Complaint for Injunctive and Declaratory Relief and Damages, Demand for Jury Trial
  2. ClassAction.org, Class Action Claims Discover Bank Imposed Restrictions on Student Loan Services Based on Immigration Status
  3. PacerMonitor, Perez et al v. Discover Bank
  4. Consumer Financial Protection Bureau Settles with Student Loan Servicers Discover Bank, The Student Loan Corporation, and Discover Products, Inc. for Violating a Bureau Consent Order and Other Unlawful Practices
  5. Discover, Loan Promissory Note
  6. Discover, Consolidate Your Student Loans
  7. Discover, Repayment Assistance Options
  8. Mexican American Legal Defense and Educational Fund, Maldef Sues National Bank for Loan Policy that Discriminates Against Certain Immigrants
  9. CFPB, Consumer Complaint Database
  10. Dun & Bradstreet, Business Directory
  11. Better Business Bureau, Search Businesses and Charities