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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.
Sallie Mae vs. Discover
|Interest rates||4.00% to 14.34% variable, 4.50% to 14.83% fixed (with autopay)||2.99% to 14.86% variable, 3.99% to 14.96% 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.
- 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.
- 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.
- 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.
- 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.