When borrowers have met the limit for federal student loans, private student loans from lenders like Sallie Mae or Discover can help fill the gap.
This Sallie Mae vs. Discover Student Loans review will look into how the two student loan lenders stack up against each other.
In this review:
- Sallie Mae vs Discover Student Loans: At a glance
- Which is right for you: Sallie Mae or Discover?
- Shop around to find the best loan
Sallie Mae vs Discover Student Loans: At a glance
|Fixed APR||5.24% – 12.99%²||5.24% – 11.85%¹|
|Variable APR||3.87% – 11.87%²||4.00% – 11.35%¹|
|Loan Terms||Up to 20 years||5 – 15 years*|
|Loan Amounts||$1,000 up to 100% of school-certified cost of attendance¹||$1,000 up to 100% of school-certified cost of attendance¹|
Lowest Discover rates shown include an interest-only repayment discount and a 0.25% interest rate reduction while enrolled in automatic payments.
Both Sallie Mae, the largest private student loan lender in the US, and Discover Student Loans, a well-known national financial institution, offer qualified borrowers private student loan options.
Sallie Mae offers a variety of private student loan options for undergraduate and graduate students, dental and medical professional students, and MBA and career training students.
Discover provides options for students pursuing undergraduate or graduate degree programs, health professionals, MBA students, and law and residency students.
Sallie Mae and Discover Student Loans have subtle differences in the interest rates offered, loan fees charged to borrowers, loan minimums and maximums, available repayment plans, borrower eligibility, and added benefits.
>> Read our full reviews:
Which is right for you: Sallie Mae or Discover?
- First, where they’re tied…
- If you’re under 18…
- If you want online tutoring…
- If you earn good grades…
- If you want to track your credit score…
First, where they’re tied
As two of the largest private student loan lenders in America, there are a lot of similarities between these two lenders. We’ll get those areas out of the way first.
Both Sallie Mae and Discover issue loans to U.S. citizens, permanent residents, and international students who apply with a cosigner who is a citizen or permanent resident.
New student loans are made available to borrowers who are enrolled or plan to enroll at least half-time in a degree-earning program at an eligible school.
An evaluation of credit history and score is completed for each new borrower applying for either a Sallie Mae loan or a Discover private student loan, but a co-signer may be added to an application should the student borrower not have sufficient credit to qualify on his or her own.
Rates & fees
If you’re looking for low rates and fees, there’s no clear winner. You’ll have to ask for a rate quote from each lender to see what you’re offered, because as you can see from the table above, their APR ranges are pretty similar.
Both Sallie Mae and Discover Student Loans offer the same 0.25% interest rate reduction to borrowers who sign up for automatic payments.
They both also give borrowers the option of variable or fixed interest rate loans, so you can find the type of loan you need.
Similarly, neither lender imposes any origination, application, or prepayment penalty fees.
As with most private student loan lenders, Sallie Mae and Discover undergraduate student loans limit the maximum amount a student can borrow to 100% of the school-certified cost of attendance (aggregate loan limits apply).3
Both private lenders may approve a lower student loan amount than the total cost of attendance for any borrower, based on their underwriting guidelines. Sallie Mae has a minimum loan amount of $1,000. Discover Student Loans also has a minimum loan amount of $1,000.
Sallie Mae offers a number of different repayment programs to borrowers to help them meet their financial needs.
- Deferred repayment: Under the deferred repayment option, borrowers are not required to make any payments on borrowed funds while they are enrolled in school at least half-time or for a six-month grace period after leaving school. Once the grace period ends, borrowers must pay principal and interest payments per the agreed-upon terms at the time of application.
- Fixed repayment: Sallie Mae also offers a fixed repayment option which requires borrowers to repay $25 per month while in school and throughout the grace period.1 After a borrower leaves school, principal and interest payments are required until the loan is repaid in full.
- Interest-only repayment: The interest-only repayment option through Sallie Mae requires students to pay the monthly interest on all outstanding student loan balances during their time in school and the grace period. Principal and interest payments are due once the grace period ends. Sallie Mae also provides an option for borrowers to request a 12-month period of interest-only payments upon graduation.
Discover undergraduate student loans also offer different repayment plans, including in-school options and a deferred option. Both repayment plans require full principal and interest payments per the agreed-upon terms after the grace period ends.
- In-school repayment: Students who choose in-school repayment have the option to make either interest-only or $25 fixed monthly payments while in school and during the grace period.
- Deferred repayment: The deferred repayment plan does not require any payment while a student is enrolled in school at least half-time, nor during the grace period after leaving school. Undergraduates can take advantage of a six-month grace period, and graduate borrowers can opt for a nine-month grace period.
If you’re under 18…
If you’re younger than 18, Discover Student Loans is the winner.
Sallie Mae requires that borrowers be at least 18 years of age, while Discover requires the borrower to be at least 16.
If you want online tutoring…
Sallie Mae offers a unique benefit to new student loan borrowers who want a little extra help.
Through a partnership with Chegg Tutors, Sallie Mae borrowers can receive up to 120 minutes of online tutoring at no added cost. This could help if you need that extra push to make it through your midterms.
If you earn good grades…
Discover Student Loans provides a unique benefit to borrowers who earn good grades. Those who have at least a 3.0 GPA or equivalent can earn a one-time 1% cash reward, based on the amount of each new Discover student loan taken out.
If you want to track your credit score…
If you want to track your credit score, Sallie Mae offers an interesting perk. Borrowers who use Sallie Mae also have access to a quarterly FICO credit score** report through the lender’s website at no cost.
Shop around to find the best loan
Both Sallie Mae and Discover are great choices when it comes to private student loans. The option that’s better for you will depend on the rates you are eligible for and your personal financial situation.
If you aren’t sold on Sallie Mae or Discover, here are some other resources that you may want to check out:
- Our guide to the best private student loans
- Our list of Sallie Mae competitors & alternatives
- Our comparison of Sallie Mae vs Wells Fargo
Discover Student Loan Disclosures
- Aggregate loan limits apply.
- Lowest rates shown include an interest-only repayment discount and a 0.25% interest rate reduction while enrolled in automatic payments. The interest rate ranges represent the lowest and highest interest rates offered on Discover student loans, including Undergraduate, Graduate, Health Professions, Law and MBA Loans. The fixed interest rate is set at the time of application and does not change during the life of the loan. The variable interest rate is calculated based on the 3-Month LIBOR index plus the applicable Margin percentage. The margin is based on your credit evaluation at the time of application and does not change. For variable interest rate loans, the 3-Month LIBOR is 2.25% as of October 1, 2019. Discover Student Loans will adjust the rate quarterly on each January 1, April 1, July 1 and October 1 (the “interest rate change date”), based on the 3-Month LIBOR Index, published in the Money Rates section of the Wall Street Journal 15 days prior to the interest rate change date, rounded up to the nearest one-eighth of one percent (0.125% or 0.00125). This may cause the monthly payments to increase, the number of payments to increase or both. Please click here for more information about interest rates.
**Borrowers and cosigners who have an available FICO® Score, may receive their score quarterly after [the first] disbursement of their loan. The FICO® Score provided to you is the FICO® Score 8 based on TransUnion data, and is the same score that Sallie Mae uses, along with other information, to manage your account. FICO® Scores and associated educational content are provided solely for your own non-commercial personal review, use and benefit. This benefit may change or end in the future. FICO® is a registered trademark of the Fair Isaac Corporation in the United States and other countries.
Author: Jeff Gitlen
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