For years, Discover was a significant player in the private student loan market. However, as of 2026, the landscape has changed dramatically. Discover no longer accepts new student loan applications, having exited the business in early 2024. This guide provides current information on what this means for existing borrowers and what alternatives are available for those seeking education financing.
What Is a Discover Student Loan?
A Discover student loan was a private education loan offered by Discover Bank to undergraduate, graduate, and professional students. These loans were used to cover the cost of attendance after other financial aid, scholarships, and grants had been applied. Key features included zero application, origination, or late fees, rewards for good grades (maintaining a 3.0 GPA or higher), and multiple in-school repayment options .
Discover’s loans were private, not federal. This distinction is crucial because private loans do not offer the same borrower protections as federal student loans, such as income-driven repayment plans or Public Service Loan Forgiveness .
How Discover Student Loans Worked
Discover’s private student loans operated similarly to other private education loans. Borrowers applied directly through Discover, with approval based on creditworthiness. For undergraduate students with limited credit history, a creditworthy cosigner was typically required .
Eligibility Requirements
Eligibility for a Discover student loan was based on credit history and income. Students applying on their own needed to demonstrate sufficient creditworthiness, while those with limited credit often required a cosigner. Discover did not accept applications from borrowers who were not U.S. citizens or permanent residents without a qualifying U.S. cosigner .
Application Process
The application process involved a credit check and income verification. Applicants could apply online, and Discover offered customer support to guide borrowers through the process. After the application, borrowers were provided with loan terms and could choose their repayment options .
Loan Terms and Borrowing Considerations
Discover offered both fixed and variable interest rates. The specific rate depended on the borrower’s credit profile and whether a cosigner was used. Repayment terms typically ranged from 15 to 20 years, depending on the loan type .
Discover Student Loan Costs and Interest Rates
For existing Discover student loans, interest rates and fees were competitive in the private market.
Interest Rates
Interest rates on Discover student loans varied based on creditworthiness. For existing borrowers, fixed rates historically ranged from approximately 5.49% to 14.99% APR, with variable rates ranging from 5.87% to 15.12% APR .
Fees and Other Potential Costs
One of the key features of Discover student loans was the absence of many common fees. Discover did not charge application, origination, or late fees. This was a significant advantage compared to some other private lenders.
How Loan Costs Affect Total Repayment
Borrowers should understand that the total cost of a private student loan includes both the principal and the interest. Even a small difference in the interest rate can lead to thousands of dollars in additional interest over the life of the loan.
Discover Student Loan Repayment
Discover offered several repayment options for existing borrowers .
Monthly Payments
Borrowers could choose from several repayment plans, including immediate repayment, interest-only payments while in school, or deferred payments where no payments were due until after graduation. A 0.25% interest rate reduction was available for enrolling in automatic payments .
Repayment Terms
The standard repayment term for Discover student loans was 15 years for undergraduate loans and 20 years for graduate, law, MBA, and medical loans .
What Happens If Payments Become Difficult?
While Discover did not charge late fees, borrowers who struggled with payments could explore options such as deferment or forbearance, which were available on a limited basis for private loans. However, these protections are not as comprehensive as those offered for federal student loans . Some borrowers have reported difficulties with customer service when seeking assistance .
Does Discover Still Offer Student Loans in 2026?
No. Discover no longer accepts new student loan applications. The company stopped accepting applications on February 1, 2024, and has since exited the student loan business entirely.
What Happened to Discover Student Loans?
Discover Financial Services announced in November 2023 that it would sell its student loan portfolio and transfer servicing to a third-party provider. The company cited a focus on its core banking products and regulatory issues as reasons for the exit . In July 2024, Discover sold its portfolio of approximately $10.1 billion in private student loans to investment funds managed by Carlyle and KKR .
What Does This Mean for Existing Borrowers?
Existing Discover student loans were not eliminated. They were sold to the Carlyle/KKR investment funds, and servicing was transferred to Firstmark Services, a division of Nelnet .
- Your loan still exists: The principal balance, interest rate, and repayment term should carry over unchanged under federal law .
- You must use Firstmark Services: Manage your account, make payments, and access billing statements at firstmark.com .
- Auto-pay and rate discounts do not transfer automatically: You must re-enroll in automatic payments with Firstmark to maintain any 0.25% interest rate reduction.
- The Discover Student Loans Account Center is no longer the primary servicer. You should transition all account management to Firstmark Services .
Discover Student Loan Alternatives in 2026
Since Discover no longer accepts new applications, prospective borrowers should consider these alternatives:
Federal Student Loans First
Federal student loans should be the first option for any borrower. They offer superior borrower protections not available from private lenders, including fixed interest rates, income-driven repayment plans, and Public Service Loan Forgiveness eligibility .
Top Private Student Loan Lenders
Several active lenders offer products comparable to Discover’s former offerings :
- College Ave: Offers the broadest product range for undergraduate, graduate, parent, and refinance loans with multiple repayment terms and no origination fees. Cosigner release requires payments equal to half the original loan term .
- Sallie Mae: Features the fastest cosigner release in the industry (after 12 consecutive on-time principal-and-interest payments) and no origination fees. Available for undergraduate, graduate, and parent borrowing .
- Earnest: Offers the most flexible repayment customization with the ability to customize repayment terms in 1-month increments (for refinance), skip-a-payment option once per year, and no origination, prepayment, or late fees .
Frequently Asked Questions
Does Discover still offer student loans in 2026?
No. Discover stopped accepting new student loan applications on January 31, 2024, and has exited the student loan business. The portfolio was sold to Carlyle and KKR, and servicing was transferred to Firstmark Services .
What were Discover student loans?
Discover student loans were private student loans for undergraduate, graduate, and professional students. They featured no application fees, good grade rewards, and multiple repayment options .
Can I refinance a Discover student loan?
Yes. Existing Discover-originated loans can be refinanced with another private lender, potentially at a lower rate if your credit profile has improved. However, refinancing federal loans into private loans is generally not recommended, as it permanently removes access to federal protections .
What alternatives are available to Discover student loans?
Active private lenders include College Ave, Sallie Mae, and Earnest. However, borrowers should prioritize federal student loans first before considering any private lender .
Are Discover student loans federal or private?
Discover student loans were private loans. They were not guaranteed by the U.S. government and did not offer federal borrower protections .
Can borrowers outside the U.S. use Discover student loans?
Discover historically accepted international students but required a U.S. citizen or permanent resident co-signer. Most other private lenders have similar requirements. German students studying in Germany should typically use BAföG or KfW loans instead of U.S. private education financing .
Final Thoughts
Discover student loans are no longer available for new borrowers. The company exited the market in 2024, and its portfolio was sold to Carlyle and KKR. For current Discover borrowers, the loan is now serviced by Firstmark Services, and you must re-enroll in auto-pay to maintain any rate discount.
For anyone seeking new education financing, the first step is to complete the FAFSA to access federal student loans, which offer superior borrower protections and repayment flexibility. Private loans should only be considered after federal options are exhausted and should be carefully compared on rates, fees, terms, and borrower protections.