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Sallie Mae vs. Discover student loans

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Students sit in a college lecture hall
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Sallie Mae and Discover are two of the biggest names in student loans, offering private student loans for both undergraduate and graduate students. Sallie Mae gives borrowers a range of repayment options and extensive online resources to help students navigate financial aid. Discover, on the other hand, is a more traditional bank that offers several opportunities for discounts.

Loan Student
Key takeaway
Sallie Mae is better for borrowers who have excellent credit to qualify for the lowest rates, while Discover is better for borrowers who need several years of funding.

Sallie Mae vs. Discover

Sallie Mae Discover
Interest rates 2% to 12.35% variable, 3.75% to 13.72% fixed (with autopay) 2.99% to 12.59% variable, 4.99% to 13.99% fixed (with autopay)
Repayment terms 10 to 20 years 15 to 20 years
Loan amounts $1,000 to 100% total cost of attendance $1,000 to 100% total cost of attendance
Benefits Four free months of Chegg; quarterly FICO Score; loans for students attending less than half time Rewards for good grades; multiyear loan option; no loan fees
Drawbacks No clear forbearance policy; few eligibility requirements disclosed; several fees One repayment term option per loan; high rate caps; no co-signer release

Details accurate as of July 21, 2022

Sallie Mae student loans: Pros and cons

Sallie Mae is one of the most well-known companies offering student loans. Here’s what to know if you’re considering the lender.

Pros

  • Flexible repayment options for graduate students: Sallie Mae’s graduate school loans come with a number of flexibilities for repayment. Its MBA loans, for instance, allow borrowers to make 12 interest-only payments after their grace period is complete and take 48 months of deferment during an internship.
  • Fast co-signer release: If you apply with a co-signer, you may be able to remove them from the loan after you make just 12 on-time payments and meet other eligibility requirements. Most other lenders that offer co-signer release require 24 or 36 payments.
  • Students attending less than half time are eligible: Sallie Mae extends loans to students who are attending school less than half time, which is rare for student loan lenders.

Cons

  • Vague forbearance program: Sallie Mae does not disclose information about its forbearance program. There are no details on how to qualify for forbearance or how long it lasts.
  • Can’t get personalized rates without a credit check: Unlike many other lenders, Sallie Mae does not provide specific interest rates unless you complete a full application, which will result in a hard inquiry on your credit report.
  • Few eligibility requirements disclosed: Sallie Mae does not disclose credit score or income requirements, making it harder for borrowers to determine whether the lender will work for them.

Discover student loans: Pros and cons

Discover offers a variety of student loans, though it’s not the right choice for everyone. Here are some of the lender’s benefits and drawbacks.

Pros

  • Cash back bonus available: One of Discover’s biggest perks is its cash back bonus for students who earn a 3.0 GPA or higher. This one-time bonus is worth 1 percent of the loan amount.
  • Multiyear approval: Students can apply for a loan with Discover and be approved for multiple years of funding with the company. In subsequent years, only a soft credit check is required.
  • No late fees: While most student loan companies don’t charge application or origination fees, Discover goes one step further and doesn’t charge any late fees.

Cons

  • Only one repayment term available: Discover offers only a 15-year repayment term for undergraduates and a 20-year term for graduate students, while other lenders offer a variety of repayment terms. If you want to change your repayment term, you’ll have to refinance with another lender.
  • Co-signer release is not available: If you take out a student loan through Discover with a co-signer, you will not be able to release them from the loan without refinancing.
  • High rates for borrowers with poor credit: Borrowers with low credit scores may be charged incredibly high rates with Discover — around 14 percent with a fixed rate.

Which is better: Sallie Mae or Discover?

Sallie Mae and Discover can both be good options for a student loan; they’re both reputable companies that have been in the student loan business for years.

Because Discover doesn’t offer co-signer release, Discover is a better choice for students who are taking out a loan independently — though this only holds true for students who have a great credit score, since Discover’s rate caps are high. Discover may also be a good choice for borrowers who want to stick with one lender for every year they need student loans, since subsequent years of funding require only a soft credit check.

On the other hand, Sallie Mae may be best for students who want a bit more flexibility with their repayment. Graduate students in particular can benefit from longer grace periods, interest-only payments after graduation and options to defer loans during residency or internships.

To get a better idea of which company is right for you, it’s best to compare the actual rates you may receive. Unfortunately, neither Sallie Mae nor Discover offers prequalification — meaning you have to go through a hard credit check to see your offers. You may want to begin your search by prequalifying with lenders that perform only a soft credit check; this will give you some benchmark interest rates. Then, if you’re interested in Sallie Mae or Discover, apply to both within the same week. While you’ll still go through a hard credit check, two applications close together may be treated as a single inquiry and should minimize damage to your credit score.

Written by
Zina Kumok
Contributing writer
Zina Kumok has been a full-time personal finance writer since 2015. She’s a three-time nominee for Best Personal Finance Contributor/Freelancer at the Plutus Awards and a two-time speaker at FinCon, the premier financial media conference.
Edited by
Student loans editor