Sallie Mae vs. Discover student loans: Which is better?

Sallie Mae and Discover are two big names in student loans, offering private student loans to both undergraduate and graduate students. Sallie Mae offers lenders multiple payment options and comprehensive online resources to help students navigate financial aid. Discovery, on the other hand, is a more typical bank with several discount options.

The Main Point

Sallie Mae is better for borrowers with great credit who want to qualify for the lowest rates, but Discover is best for consumers who require long-term financing.

Sallie Mae Student Loans: The Pros and Cons

Sallie Mae is one of the most popular student loan companies out there. Here's what to know if you're considering a lender.

Pros

Flexible Payment Options for Graduate Students: Sallie Mae Graduate School loans come with several flexible payment options. For example, MBA loans allow borrowers to make 12 interest-only payments after completing the grace period and a 48-month grace period during the internship.

Express Release for Co-Signers: If you apply with a co-signer, you can remove it from the loan immediately after you make 12 on-time payments and meet other eligibility requirements. Most other lenders that offer co-signature issuance require 24 or 36 payments.

Students who attend for less than half of the school year are eligible: Sallie Mae provides loans to students who attend school less than half of the time, which is unusual among student loan providers.

Cons

Vague forbearance Program: Sallie Mae does not reveal information about her patience programme. There are no details on how to qualify for stamina or how long it takes.

It is not possible to get customized rates without a credit check: Unlike many other lenders, Sallie Mae does not offer specific interest rates until you have completed an application, which results in a difficult inquiry about your credit report.

Disclosure of Some Eligibility Requirements: Sallie Mae does not disclose credit scores or income requirements, which makes it difficult for borrowers to determine whether a lender will work with them.

Discover student loans: the pros and cons

Discover offers a wide variety of student loans, though it's not the right choice for everyone. Here are some of the advantages and disadvantages of a payday loan.

Pros

Cashback Bonuses Available: One of Discover's biggest benefits is the cashback bonus for students who achieve a 3.0 GPA or higher. This one-time bonus is 1% of the loan amount.

Multi-year approval: Students can apply for a loan through Discover and be approved for multiple years of financing with the company. In following years, only a small credit check is necessary.

No Late Fee: While most student loan companies don't charge an application or origination fee, Discover goes one step further and charges no late fees.

Cons

Only one repayment term is available: Discover offers a 15-year repayment term for undergraduate students and a 20-year repayment term for graduate students, while other lenders offer a variety of repayment terms. If you want to change your repayment period, you will need to refinance with another lender.

Co-signer Release Not Available: If you took out a student loan through Discover with a co-signer, you can't have them forgive the loan without refinancing.

Higher rates for borrowers with poor credit: Borrowers with lower credit scores can be charged incredibly high rates with Discover — about 14 percent flat rate.

Which is better: Sallie Mae or Discovery?

Sallie Mae and Discover can both be good student loan options. Both are reputable companies that have been in the student loan business for years.

Since Discover doesn't offer co-signed version, Discover is a better option for independent student borrowers—although it's only for students with a high credit score because Discover's rates are higher. Hats up. Discover can also be a good choice for borrowers who want to stay with a lender each year they need student loans because only a soft credit check is required for subsequent years of financing.

On the other hand, Sallie Mae may be ideal for students who want more flexibility with their earnings. Graduate students in particular can take advantage of long grace periods, interest-only payments after graduation, and loan deferment options during residency or training.

To better understand which company is right for you, it is best to compare the actual rates you receive. Unfortunately, neither Sallie Mae nor Discover offer pre-qualification, which means you have to go through a rigorous credit check to see your offers. You may want to start your search by pre-qualifying with lenders who only do a flexible credit check. This will provide you with a few benchmark interest rates. Then, if you're interested in Sallie Mae or Discover, apply for both in the same week. While you will still be subject to a rigorous credit check, two applications at once can be considered one inquiry and should reduce the damage to your credit score.

Bottom Line

Sallie Mae and Discover student loans come with potential pros and cons to consider. Review each lender's eligibility requirements, fees, features, terms and incentives offered to determine which may be the best fit. To compare rates, you must file a formal application with each lender, which requires a rigorous credit check.