In order to make its student loans more attractive, Discover
Student Loans, a unit of
Discover Financial Services
), has decided to cut down the interest rates on its fixed rate
student loans for undergraduate, graduate and post-graduate
students. The company is now offering fixed rate loans with an
interest rate beginning at 5.49%.
While the health professional, law, MBA and graduate student
loans of Discover Financial carry an interest rate between
5.49%-7.89%, undergraduate student loans have a range of
5.49%-9.99%. Thus, apart from some undergraduate students, most
students can get loans at lower rate than the Federal Direct PLUS
loans, which carry a fixed rate of 7.9%.
Half of the graduate students will also get loans at a lower
rate than the Unsubsidized Federal Stafford Loans, which carry a
6.8% interest. Moreover, the lack of origination fees as compared
to the 4% charged by Federal Direct PLUS loans and 1% by the
Unsubsidized Federal Stafford Loans acts as an added advantage
for Discover Financial.
Additionally, the company does not charge any late payment or
returned payment fees. Even the variable rate student loans of
Discover Financial are at par with the Prime Index (3.25% at
The low rates should help attract more students toward
Discover Financial's student loans. The company's student loans
are gradually gaining popularity. This is also boosting the
income of the Direct Banking segment of Discover Financial.
We expect the company's earnings from student loans to
continue growing, buoyed by the low rates. Discover Student Loans
is among the largest private student loan providers in the
Discover Financial carries a Zacks Rank #2 (Buy). Other
companies worth considering in the financial sector are
Regional Management Corp.
) - Zacks Rank #1 (Strong Buy),
World Acceptance Corp.
) - Zacks Rank #2 (Buy) and
) - Zacks Rank #1 (Strong Buy).
DISCOVER FIN SV (DFS): Free Stock Analysis
REGIONAL MANAGE (RM): Free Stock Analysis
VANTIV INC-A (VNTV): Free Stock Analysis
WORLD ACCEPTANC (WRLD): Free Stock Analysis
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