Janice Lozano
Discover Student Loans no longer offers or services student loans as of 2024, and borrowers with existing loans will have their loans and payments serviced by a third-party provider. Discover does not offer forgiveness options for borrowers who have made payments for several years or paid off the original loan balance. Borrowers who default on their loans may face negative consequences such as blemishes on their credit scores. Bankruptcy can resolve private loans from Discover, allowing individuals to reclaim their financial freedom.
| Characteristics | Values |
|---|---|
| Student loan business | Discover is no longer accepting new student loan applications as of January 31, 2024 |
| Existing loans | Current loans will be serviced by a third-party provider to be announced |
| Payments | Payments on existing loans will not be affected |
| Options | Explore free money options like scholarships and grants before considering private student loans |
| Bankruptcy | Bankruptcy can resolve private loans and allow for a fresh start, but it's a complex process that requires legal expertise |
| Forgiveness | Discover does not offer forgiveness options like federal loans; they will pursue payments until the full balance is paid |
| Consolidation | Private loans from Discover cannot be combined with federal loans through a Direct Consolidation Loan |
| Settlement | Discover may be receptive to settling private student loan debt, especially after default, but it depends on loan amount, financial situation, and negotiation skills |
| Transfer | Discover has transferred student loans to Firstmark in 2024; contact Firstmark for transferred loans and Discover for non-transferred loans |
| Scams | Be cautious of scammers claiming to be Discover or Capital One and requesting sensitive information |
Explore related products
What You'll Learn
Discover no longer offers student loans
Discover® no longer offers or services student loans as of February 1, 2024. The company has stated that it will no longer accept new student loan applications, and instead plans to sell its student loans business. Discover is transferring the Discover Student Loans portfolio and the servicing of their loans to a third-party provider to focus their efforts on other key business objectives.
If you have a Discover student loan, the company has assured borrowers that their loans and payments won't be affected for now. All current loans will eventually be serviced by a third-party provider, which has not yet been announced. Discover borrowers should keep an eye out for any changes and communications from the company.
If you were considering taking out a loan with Discover, you will need to explore other options. It is recommended that you exhaust all other possibilities before seeking another private student loan lender. You can look into scholarships, grants, federal student loans, or other private student loan options.
Discover student loans have had a few brushes with the law in recent years, prompting the Consumer Financial Protection Bureau (CFPB) to step in and order the company to refund millions of dollars to affected consumers. Discover does not offer forgiveness options to borrowers who have made payments for several years or paid off the original loan balance. Bankruptcy can be an option to resolve private loans from Discover, allowing individuals to reclaim their financial freedom.
Student Housing: Property Tax Exempt?
You may want to see also
Explore related products
Current loans will be serviced by a third party
Discover Bank merged into Capital One N.A. in May 2025, and Discover no longer offers or services student loans. Discover will transfer the servicing of their loans to a third-party provider to focus their efforts on other key business objectives. This means that current loans will be serviced by a third party, although the provider has not yet been announced.
Discover student loan borrowers will not be affected by this change for now, and their loan payments will remain the same. However, borrowers should be aware of potential scams, as scammers may contact them asking for sensitive information. Discover will not contact borrowers about these changes and will not ask for sensitive information such as account numbers, passwords, or one-time codes.
Discover student loans have had some legal issues in the past, with the Consumer Financial Protection Bureau (CFPB) ordering the company to refund millions of dollars to affected consumers. Despite this, Discover is known to be receptive to settling private student loan debt that has been charged off. Borrowers can attempt to delay their payments through deferment or forbearance or by negotiating a lower interest rate for a short period. However, Discover does not offer any forgiveness options for borrowers who have made payments for several years or paid off the original loan balance.
If you have a Discover student loan, it is essential to consult your financial advisor, tax advisor, or attorney for specific advice regarding your loan and the transfer to a third-party servicer.
Student Loans: Government Aid or Personal Responsibility?
You may want to see also
Explore related products
Bankruptcy can resolve Discover private loans
Discover student loans have had a few brushes with the law, and the Consumer Financial Protection Bureau (CFPB) has had to step in and order the company to refund millions of dollars to affected consumers. Despite this, Discover does not offer any forgiveness options to borrowers who have made payments for several years or paid off the original loan balance. Discover will pursue you for payments until the entire balance is paid in full.
Bankruptcy can be a way to resolve Discover private loans. While it can be more difficult to discharge student loans than other types of unsecured debt, it is not impossible. The Bankruptcy Code provides a test for relief, which is to show "undue hardship", and there is an extra step in the process, an "adversary proceeding", which is essentially a lawsuit within the bankruptcy. However, some private loans for educational purposes can be discharged in a normal bankruptcy proceeding, just like other consumer debts. For example, loans where the loan amount was higher than the cost of attendance (tuition, books, room, and board) can be discharged, as can loans to pay for education at places that are not eligible for Title IV funding, such as unaccredited colleges or foreign schools.
A student loan lawyer can help you navigate this process and secure a realistic and affordable settlement agreement. For example, one client was able to settle $112,000 of private student loan debt for $40,000 over ten years, interest-free, drastically reducing their monthly payments. Another client, a teacher, was able to settle $430,000 in private student loan debt for $86,000 over 20 years, with a 1% interest rate.
While bankruptcy can be a solution, it is important to note that there are other options to consider first. For instance, Discover and other major student loan lenders are known to be receptive to settling private student loan debt that has been charged off. They may be amenable to a settlement because it gives them an opportunity to recover some of their losses. To secure a settlement, you will likely need to make a lump-sum payment or be able to pay a reduced settlement amount over a few months.
How to Get Help Paying Off Student Loans
You may want to see also
Explore related products
Discover does not offer forgiveness options
Discover Student Loans no longer accepts new student loan applications after 31 January 2024. Discover is transferring its student loan portfolio and servicing of their loans to a third-party provider. While Discover offers repayment assistance programs, it does not offer forgiveness options for borrowers who have made payments for several years or have paid off the original loan balance. This means that Discover will pursue you for payments until the entire balance is paid in full.
If you are struggling to make payments, Discover and other major student loan lenders are often receptive to settling private student loan debt that has been charged off. To secure a settlement, you will likely need to make a lump-sum payment or negotiate a reduced settlement amount over a few months. Bankruptcy is another option to resolve your private loans from Discover and reclaim your financial freedom. However, it is important to consult a financial advisor, tax advisor, or attorney about your specific circumstances.
In some rare cases, Discover has forgiven defaulted student loans due to exiting the student loans business. However, the amount forgiven may be considered income for tax purposes, resulting in additional tax liabilities for the borrower. It is important to note that the American Rescue Plan Act of 2021 exempts forgiven student loans from federal income taxes for loans discharged between 1 January 2021 and 31 December 2025.
Is Prime Student Subscription Worth the Cost?
You may want to see also
Explore related products
Defaulting on Discover loans: settlement options
Defaulting on a Discover student loan can lead to legal action, including lengthy lawsuits and wage garnishment. It can also result in credit damage, making it difficult to secure another loan. However, there are several options available to those who have defaulted or are at risk of defaulting on their Discover student loans.
One option is to negotiate a settlement with Discover or a collection agency to reduce the principal balance and make payments towards the reduced loan balance. Discover typically settles for about 60% to 75% of the owed amount and usually requests a lump sum payment. However, there have been instances where payment plans of up to 60 months have been agreed upon. It is important to note that negotiating a settlement can be complex and may require the assistance of a seasoned student loan attorney.
Another option is to consider bankruptcy, which can provide a fresh financial start. While it may not be an ideal solution, it can be a lifesaver for those overwhelmed by debt. Bankruptcy can resolve private student loans from Discover and restore your ability to make major life decisions, such as buying a home or starting a family.
Additionally, refinancing with a new lender may be an option for some borrowers. This can offer lower interest rates or extended repayment terms, but it often requires a strong credit score and stable income. There are also temporary options, such as forbearance, catch-up payments, or modified repayment plans, that may be available before defaulting on a loan.
It is important to explore all available options and understand the potential risks and benefits of each before making any decisions. Discover also offers repayment assistance programs and credit counselling services that can provide guidance and support to those struggling with loan repayments.
Student Loans: Can You Use Them for Rent?
You may want to see also
Frequently asked questions
Discover does not offer forgiveness options for borrowers who have made payments for several years or paid off the original loan balance. They will pursue you for payments until the entire balance is paid in full. You can delay payments briefly through deferment or forbearance or secure a lower interest rate for a few months. However, if you fall far behind, the loan will default, and you may need to consider bankruptcy to resolve your debt.
Discover will no longer accept new student loan applications, but current loans will be serviced by a third-party provider. Your loan payments will not be affected, and you will be notified of any changes.
If your loan is transferred, you will be notified and will need to contact the new lender for any loan-related documents or questions. Your loan balance may be reduced, but you may owe taxes on the discharged amount.
