Student loan interest rates
Applicants may have the choice of a fixed or variable interest rate loan.
- A fixed interest rate is set at the time of application and does not change during the life of the loan unless you are no longer eligible for one or more discounts.
- A variable interest rate may change quarterly during the life of the loan if the interest rate index changes. This may cause the monthly payment to increase, the number of payments to increase, or both.
Interest rates for private student loans are credit based. Therefore, the interest rate is not the same for every borrower. Our lowest rates are only available to applicants with the best credit. The APR will be determined after an application is submitted. It will be based on credit history, the selected repayment option, and other factors, including a cosigner’s credit history (if applicable). If a student does not have an established credit history, the student may find it difficult to qualify for a private student loan on their own or receive the lowest advertised rate.
Interest rate index for loans originated by Discover® Student Loans:
| Application submission time period | Index |
|---|---|
| Prior to June 1, 2014 | Prime |
| June 1, 2014 - November 13, 2021 | 3-Month LIBOR |
| On or after November 14, 2021 | 3-Month CME Term SOFR |
Please note, if you have multiple variable rate private student loans originated by Discover, your interest rate may be based on different rate indexes.
About student loan interest rates and APR
What is an interest rate?
- The interest rate is used to calculate the actual amount of interest that accrues on your student loan.
- For example, if your principal loan balance is $10,000 and your interest rate is 10% (no payments are due and you make no payments), then your loan will accrue $1,000 (= $10,000 x 0.10) in interest in one year.
What is an APR?
- The Annual Percentage Rate (APR) takes into account the interest rate, fees (if any), length of your deferment period, and how interest capitalizes.
- The APR is a number you can use to compare loans from different lenders since their interest rates, fees, deferment options, and capitalization policy may differ.
- The APR does not represent the rate at which interest accrues.
- The APR may be different during the deferment period and the repayment period.
Why would the interest rate be different from the APR?
- Discover student loans have zero fees and no interest capitalization during the deferment period, so the deferment period APR will be less than the interest rate.
- For our Discover student loans, accrued interest capitalizes at the start of the repayment period. Since we do not charge fees and assuming you make all your scheduled payments on time, the repayment period APR will be equal to the interest rate.
Discover Undergraduate Loans
| Deferment Period (45 months in school + 6 months grace) |
Interest Rate | Repayment (180 months of equal payments) |
Life of Loan (231 Months) |
|
|---|---|---|---|---|
| Repayment Option | Fixed Rate | Monthly Payment | Total Loan Cost | APR |
| Deferred Payment ($0 monthly) |
9.99% | $152.18 | $27,395 | 9.33% |
| In-school Payment ($25 fixed monthly) |
9.99% | $138.40 | $26,190 | 9.51% |
| In-School Payment (Interest-only monthly) |
9.99% | $108.11 |
$23,538 | 9.98% |
Discover Graduate Loans
| Deferment Period (21 months in school + 9 months grace) |
Interest Rate | Repayment (240 months of equal payments) |
Life of Loan (270 Months) |
|
|---|---|---|---|---|
| Repayment Option | Fixed Rate | Monthly Payment | Total Loan Cost | APR |
| Deferred Payment ($0 monthly) |
8.99% | $109.37 | $26,252 | 8.79% |
| In-school Payment ($25 fixed monthly) |
8.99% | $102.59 | $25,375 | 8.85% |
| In-School Payment (Interest-only monthly) |
8.99% | $90.42 |
$23,801 | 8.98% |
About 3-Month CME Term SOFR
The variable rate for student loan applications received on or after November 14, 2021, is based on the 3-Month CME Term SOFR index. The 3-Month CME Term SOFR (Secured Overnight Financing Rate) is a rate index based on what the market expects rates to be over the next three-month time period. You can find more information on the 3-Month CME Term SOFR at CME Group.
CME Term SOFR is different from Overnight SOFR and associated SOFR Averages, which are based on historical performance of Overnight SOFR. More information is available at the Federal Reserve Bank of New York.
When does a variable interest rate based on 3-Month CME Term SOFR change?
Discover Student Loans may adjust the variable interest rate quarterly on each January 1, April 1, July 1, and October 1 (each an “interest rate change date”), based on the 3-Month CME Term SOFR rate available for the day that is 15 days prior to the interest rate change date, rounded up to the nearest one-eighth of one percent (0.125% or 0.00125) or 0%, whichever is greater. If the 3-Month CME Term SOFR rate is less than zero percent, then the index will be deemed to be zero percent (as stated in the promissory note) for purposes of calculating your interest rate.
What is the current 3-Month CME Term SOFR index?
Rates are rounded up to the nearest one-eighth of one percent (0.125% or 0.00125) or 0%, whichever is greater. The 3-Month CME Term SOFR index is used for loan applications received on or after November 14, 2021.
| Quarter | 3-Month CME Term SOFR | Available from CME Group on |
|---|---|---|
| Jan 1 - Mar 31, 2023 | 4.625% | Dec 16, 2022 |
| Oct 1 - Dec 31, 2022 | 3.50% | Sep 16, 2022 |
| Jul 1 - Sep 30, 2022 | 2.00% | Jun 16, 2022 |
| Apr 1 - Jun 30, 2022 | 0.625% | Mar 17, 2022 |
| Jan 1 - Mar 31, 2022 | 0.125% | Dec 17, 2021 |
| Oct 1 - Dec 31, 2021 | 0.125% | Sep 16, 2021 |
View information about 3-Month LIBOR value.