03 Aug Discover Great Rates and Zero Fees
Recently there has been a great deal of “interest” in student loans. The media and the government have made an issue of student loan debt, while students and parents are still trying to navigate the student loans maze. This negative attention may make it seem like student loans are a bad idea but, when thoroughly researched and used properly, they can be a great tool in helping students achieve their college dreams.
As with any kind of loan, you want to do your research because all student loans are not alike. There are differences between federal and private student loans, as well as differences among private loan lenders. Two important areas you must understand before signing for any student loan are interest rates and fees. The Discover® Student Loans website does an excellent job of explaining its policies regarding rates and fees. Take a look at some of the information they provide and see how their loans compare to federal student loans as well as loans from other private lenders:
• Great Rates: You must know what interest rate you are paying on your student loan, and whether it is fixed or variable. Interest rates on federal student loans are the same for every borrower and are fixed at set rates, depending on the type of loan. Discover provides the choice of highly-competitive fixed or variable interest rates. Applications submitted to Discover on or after June 1, 2014, will have an interest rate based on the 3-Month LIBOR (London Interbank Offered Rate). They will also reduce your interest rate by 0.25% when you sign up for automatic payments. Since rates on private student loans are based on the borrower’s credit history, the interest rate is not the same for every borrower. Your credit history or the availability of a cosigner may result in a lower interest rate.
• Zero Fees: Another factor which can increase your borrowing costs is fees. Lenders may charge extra for loan application fees, origination fees, and late fees, which ends up costing you more money in the long run. For example, an origination fee covers the administrative fees for processing your loan. The federal government and many private lenders have origination fees, while Discover does not have any fees at all. It is important to find out about these fees and factor them into your total cost of borrowing.
There are other ways that private student loan lenders such as Discover help you manage your student loan debt. For example, Discover offers rewards for good grades where students who receive at least a 3.0 GPA (or its equivalent) can qualify for a one-time cash reward equal to 1% of the loan amount on each new Discover student loan.
It may seem confusing, but knowledge is power when it comes to student loans. If you need more information about the college financial aid process, or would like to learn more about federal and private student loans, contact College Financial Aid Advisors (CFAA).