Interest- Only Repayment Option Rate Discount Terms and Conditions

Interest- Only Repayment Option Rate Discount Terms and Conditions

These Terms and Conditions describe the eligibility and policies for the interest rate reduction associated with the interest-only repayment option. "You" refers to the customer. "We" refers to Discover Bank.

Note: You will be eligible for the Auto Debit Reward if you choose an in-school repayment loan option during the application process, and while you are enrolled in the Auto Debit payment program for the agreed in-school payment amount during the in-school and grace periods. Full principal and interest payments will be debited when the loan enters the Repayment Period, as defined in the Promissory Note. See Auto Debit Reward Terms and Conditions below for eligibility and enrollment information.

Interest-Only Repayment Option Interest Rate Discount

You will receive an interest rate discount (0.35%) if, during the application process, you selected the interest-only repayment option and make interest-only payments during the in-school and grace periods.

The interest rate discount will be applied to your loan with an interest-only repayment option once the loan is disbursed and will continue if you make timely monthly interest payments during the in-school and grace periods.

Before your loan with an interest-only repayment option enters the Repayment Period, you must pay off unpaid accrued interest on your loan to continue receiving the interest-only discount during the Repayment Period.

If your unpaid accrued interest at the start of the Repayment Period exceeds 60 days of accrued interest, you may not receive the interest rate discount during the Repayment Period. Sixty days of accrued interest will be calculated based on your original loan amount and interest rate (which includes any interest-only discount), as reflected on your Final Disclosure.

Any unpaid accrued interest on your loan before it enters the Repayment Period will be capitalized and added to the principal balance of your loan. This may increase the principal balance of your loan, the amount of your monthly payment and the total cost of your loan.

Interest-Only Repayment Option Interest Rate Discount Exceptions

If you fail to make timely monthly interest payments, your loan will be placed in a suspension period of up to six months at a time, which will increase the amount you pay over the life of the loan.

The suspension of your required interest payments while in-school and during the grace period and prior to the Repayment Period will result in the loss of the 0.35% interest rate discount during the suspension period.

When the suspension ends, you will again be required to make monthly interest payments on your loan and the discount will be reapplied if you do so. If your interest-only loan enters a deferment period, following entry into the Repayment Period, you will again be required to make your monthly interest-only payments.

Payment suspensions that occur during in-school or other types of deferment periods that follow entry into the Repayment Period will not result in the loss of the interest rate discount.

You can make payments while your loan is on a payment suspension. You may also call us to cancel the payment suspension at any time if you are able to resume your scheduled monthly payments before your payment suspension ends and resume your interest rate discount.

Changes to These Terms and Conditions

These Terms and Conditions are subject to change without notice. We may change them at any time including, but not limited to, changing criteria or imposing additional conditions.

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Auto Debit Reward (ADR) Terms and Conditions

These Terms and Conditions describe the eligibility and policies for the Auto Debit Reward. "You" refers to the customer. "We" refers to Discover Bank.

Auto Debit Reward Eligibility

You will be eligible to receive the Auto Debit Reward if you meet all of the following conditions:

  • You are the borrower of a student loan originated or purchased by Discover Bank, or the cosigner for all such student loans of such a borrower.
  • All loans in the account must be current. You are not eligible for ADR if you have loans in forbearance, delinquency and/or default or charge-off statuses or loans in reduced repayment programs. Existing Auto Debit enrollments will be cancelled if loans in the account enter those statuses and programs mentioned above.
  1. In-school Interest-Only Repayment. You will be eligible for the Auto Debit Reward while you are enrolled in the Auto Debit payment program for at least the agreed in-school interest payment amount during any in-school and grace periods. Full principal and interest payments will be debited when the loan enters the Repayment Period.
  2. In-school Fixed Repayment. You will be eligible for the Auto Debit Reward while you are enrolled in the Auto Debit payment program for at least the agreed in-school $25 fixed payment amount during any in-school and grace periods. Full principal and interest payments will be debited when the loan enters the Repayment Period.
  3. Fixed Payments During Deferment. You can retain or request the Auto Debit Reward during deferment periods by calling 1-800-STUDENT and authorizing automatic payments for the Minimum Payment Due + fixed amount. During deferment, the Minimum Payment Due will be zero (no payment is due), but the fixed amount will be debited. Full principal and interest payments and your stated fixed amount will be debited when your deferment ends, unless you cancel your automatic payments.
  4. Full Principal and Interest Payments During the Repayment Period. You can request the Auto Debit Reward during the Repayment Period by calling 1-800-STUDENT and authorizing automatic payments for at least the Minimum Payment Due amount. You also have the option of adding a fixed amount, above and beyond the Minimum Payment Due amount to be debited each month.
  • You are not eligible for ADR, if your monthly debited payment amount is $0.00.

Auto Debit Enrollment

To receive the Auto Debit Reward, you must be enrolled in Auto Debit payment program for monthly automatic payments from a United States bank account.

To enroll loans:

  • Call us at 1-800-STUDENT to enroll. Cosigners must enroll in the Auto Debit payment program via phone.
  • Visit DiscoverStudentLoans.com and click the link for the Auto Debit payment program.
  • Your enrollment will be at the account level and will include all loans on the statement. Any future Discover student loans that are added to the account may also be covered by your enrollment. You can remove individual loans from the Automatic Debit enrollment by calling 1-800-STUDENT.

Enrollment usually begins 3 to 5 weeks after we receive your completed enrollment form. You should continue to send us monthly payments until you receive written confirmation that your enrollment was successful.

You may be able to increase the amount of your monthly automatic payment by calling us at 1-800-STUDENT

You can cancel or modify future-scheduled Auto Debit payments until 5:00 PM ET on the day your payment is scheduled by calling us at 1-800-STUDENT. Cancelling your automatic payments will also cancel the Auto Debit Reward.

Auto Debit Reward Amount

We will apply the Auto Debit Reward by reducing your interest rate by 0.25%. This may change the amount of your minimum monthly payment, may change the total number of payments necessary to pay off your loan and may change the amount of your final payment. It is your responsibility to notify us if you believe the Auto Debit Reward has not been applied correctly. Your Auto Debit Reward cannot be doubled, even if the borrower and cosigner are both enrolled in the Auto Debit payment program.

Changes to These Terms and Conditions

These Terms and Conditions are subject to change without notice. We may change them at any time including, but not limited to, changing the eligibility criteria or imposing additional conditions.

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