How to Refinance Discover Student Loans

Discover, which started out as a credit card company, now offers a wide range of financial products and services, including?private student loans. If you borrowed Discover student loans to get through school or to help your child, but now you’re making payments, it may be a good idea to consider refinancing them with another lender.

Here’s why?student loan refinancing?for Discover why student loans might be the right choice and how to take advantage of record-low interest rates.

Why you should refinance Discover student loans

Discover offers a range of private student loan options for both undergraduate and graduate students. Available Discover education loans include:

• Undergraduate student loans
• Graduate student loans
• Health professions student loans
• Residency student loans
• MBA student loans
• Law school student loans
• Bar exam student loans
• Parent student loans
• Consolidation student loans

Depending on the type of loan you have, your terms, including your interest rate, can vary. Now that you’re making payments on your debt, you may be wondering, "Can you refinance Discover student loans?" The answer is yes, and there are a few different reasons to consider it:

• You want a lower interest rate:?In early 2021, fixed student loan refinancing rates are at a record low. If your credit and income are in good shape, you may be able to save money.
• You’re interested in paying off your student debt early:?Some lenders offer repayment terms as short as five years.
• You need a lower monthly payment through a longer repayment plan:?If you’re having?trouble keeping up with your payments?or you’re hoping to reduce your debt-to-income ratio (more on that below) some refinance lenders allow you to extend your term up to 20 years.
• You’ve had a bad experience with Discover:?In 2020, the?Consumer Financial Protection Bureau?received 111 complaints from Discover’s student loan customers. While that’s low relative to how many borrowers the lender has, if you’re someone who’s had a poor experience, another lender may be able to provide better satisfaction.
• You want to switch your interest rate type:?Discover offers both variable and fixed interest rates. If you’re looking to switch from one to the other, though, you’ll need to refinance your debt with another lender.
• You want to transfer parent loan debt to your child:?If you took out parent student loans, some refinance lenders will allow you to transfer the debt to your child, as long as they agree and can qualify on their own.
• You want to remove a cosigner:?If your parent or another loved one cosigned your Discover student loans and you can now qualify to refinance on your own, it can be a great way to remove them as a cosigner and release them from the responsibilities associated with that arrangement.

Is Discover student loan consolidation the same as refinancing?

Discover offers its own program to refinance and consolidate student loans, where the borrower is able to combine multiple loans for a lower interest rate and more favorable term.

However, the Discover student loan consolidation is different from a federal student loan consolidation. Federal consolidation will combine all of your loans into one payment, but your new interest rate will be the weighted average of your previous rates. Only federal loans are eligible for federal consolidation.

Discover student loan consolidation is the same as private student loan refinancing. Both federal and private loans are eligible, and you will select the new interest rate and repayment term. If you already have Discover student loans, you may want to explore other lenders and shop around to find the best interest rate.

Benefits of refinancing Discover student loans

Discovering student loan refinancing through another lender can come with several different benefits. Here’s how the process could help you:

You could save thousands of dollars

With record-low interest rates available, you could qualify for a much lower interest rate than what you’re currently paying.

For example, let’s say you have $20,000 in student loans with Discover with a 10-year repayment term. And because your credit wasn’t well established yet, you have a 9% interest rate.

Now, let’s say your credit has dramatically improved and your income is in a good place, so you qualify for a 4% interest rate and keep the same repayment term. Comparing those two options, you’d save $51 per month with the new loan and $6,103 in total interest over the life of your loan.

Refinancing Discover student loans can also allow you to switch from a variable interest rate to a fixed rate or vice versa. While variable interest rates typically start off lower, they fluctuate based on the current market rates, and because interest rates are so low right now, the chances of your rate going up are high.

By switching to a fixed rate, you could lock in a low rate and avoid the extra cost associated with higher interest rates in the future.

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