Introduction:
Imagine you are going to school, and you need some extra money to pay for your books, classes, and other things. Some people get money from a special kind of loan called a student loan. This money helps pay for college or school, and then you pay it back over time. It’s like borrowing money from a friend and promising to give it back later.
We will, there’s some news that might surprise you: Discover, the company that helps people with credit cards and loans, has decided to stop offering student loans. This means that starting in the future, you won’t be able to borrow money from Discover to pay for school. But why would a company like Discover stop offering student loans? Let’s find out!
Why Is Discover Stopping Student Loans?
Discover has decided to stop offering student loans because of a few important reasons. It is a big decision, but it’s one that they’ve thought about carefully. Here are the main reasons why they are making this change:
The Risk of Students Not Paying Back Loans:
When a company gives someone money, they want to make sure that person can pay it back. If they don’t get their money back, it can cause big problems for the company. Student loans are a little different because some students don’t have a job right away to help them pay back the money. Discover may have seen that some students are struggling to pay off their loans, and so they decided it might be safer for them to stop offering them.
Changes in the Loan Industry:
The world of loans is changing, and many people now get their student loans from the federal government instead of private companies like Discover. The government offers loans at a lower interest rate and gives students more time to pay them back. This change has made it harder for private companies like Discover to compete, so they decided it was time to leave the student loan business.
Focus on Other Financial Products:
Discover wants to focus on other types of loans and financial products that might be easier to offer and more popular with their customers. For example, they offer credit cards, personal loans, and even mortgages to help people buy homes. Discover might be choosing to spend more time helping people with these types of loans instead of student loans.
What Does This Mean for Students?
If you were thinking about getting a student loan from Discover, you’d need to look for other places to borrow money for school. But don’t worry! There are still many other ways to get the money you need for your education. Here’s what you can do if you need help paying for school
Federal Student Loans:
The federal government is the biggest lender for student loans. These loans usually have lower interest rates and more flexible repayment options. You can apply for federal student loans by filling out the FAFSA (Free Application for Federal Student Aid). The government offers loans to students, and they can also offer you grants (money you don’t have to pay back) if you qualify.
Other Private Lenders:
Even though Discover is stopping their student loans, other private companies still offer them. Some of these companies include Sallie Mae, SoFi, and Citizens Bank. You can compare different loans from these companies to see which one has the best deal for you.
Scholarships and Grants:
Scholarships and grants are a great way to get money for school without having to pay it back! Many organizations, schools, and businesses offer money for students. You can apply for scholarships based on your grades, sports skills, hobbies, or even where you live. Look for scholarships and grants on websites and at your school to help pay for college.
FAQs:
Why is Discover stopping student loans?
Discover is stopping student loans because it’s too risky for them. Many students are struggling to pay them back, and other companies like the government are offering better options. Discover wants to focus on other kinds of loans that are easier for them to offer.
What can students do now?
Students can apply for federal student loans through the government, or they can look for other private lenders like Sallie Mae or SoFi. Scholarships and grants are also good options to help pay for school without borrowing money.
Will I have to pay back my Discover student loan?
If you already have a student loan with Discover, you will still need to pay it back. The decision to stop offering student loans doesn’t change anything for loans that have already been given out.
Can I still get a credit card from Discover?
Yes! Discover still offers credit cards and other financial products like personal loans and home loans. You can still use Discover for things like shopping, saving money, or getting a loan to buy a house.
Is this a big change for the loan world?
Yes, it’s a big change. Since Discover was a popular company offering student loans, other companies might start offering more loans, and students will have more options to choose from. However, it also means that students might have to pay closer attention to the loans they choose and make sure they can afford to pay them back.
Conclusion:
Discover is stopping student loans, but that doesn’t mean students are out of options. While Discover’s decision to leave the student loan business might feel surprising, there are plenty of other ways to pay for college. Federal student loans, private lenders, scholarships, and grants are still available to help you with your education.
It’s always a good idea to shop around and compare different loan options, just like you would compare different toys or clothes before you buy them. Take your time, and make sure you understand the loan you’re getting before you sign anything.
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