Discover is out of the student loan business. The lender stopped accepting new applications on January 31, 2024, and in July 2024 agreed to sell its roughly $10.1 billion private student loan portfolio.
If you already have a Discover student loan, your account didn’t disappear — it’s now serviced by Firstmark Services. But you can no longer get a new loan from Discover.
Since Discover was one of the larger student loan lenders, we have some Discover Student Loan alternatives below ->
Why Discover Exited The Student Loan Business
Discover’s student loan unit drew federal scrutiny for years. The Consumer Financial Protection Bureau issued a consent order in 2015 (PDF File) after finding Discover overstated minimum payments due, sent inaccurate tax information, and used illegal collection tactics.
In 2020, the CFPB issued a second order, ruling that Discover had violated the first one and continued unlawful practices. That order required at least $10 million in consumer redress and a $25 million penalty.
Student loans were also a small slice of Discover’s overall business compared with its credit cards and banking. Faced with ongoing servicing problems and a portfolio that no longer fit its strategy, the company chose to sell rather than keep investing.
Finally, to put the last nail in the coffin, Capital One acquired Discover in 2025.
What It Means For Current Borrowers
If you borrowed from Discover before it wound down, nothing about your loan terms changed — your rate, balance, and repayment schedule stay the same. What changed is who you pay.
Firstmark Services now handles billing, payments, and account management. Borrowers need to create an account with Firstmark to make payments and manage their loans.
One note: Discover offered perks like a 1% cash reward for good grades and a 0.25% auto-pay rate discount. Those applied to Discover-originated loans. Firstmark is a servicer, not a lender, so it doesn’t issue new loans or new borrower rewards.
Alternatives If You’re Shopping For A Student Loan
With Discover gone, plenty of private lenders still compete for student borrowers. The College Investor’s current top picks include:
- College Ave — Among the lowest rates available, with flexible 5-, 10-, 15-, and 20-year terms and in-school deferment or interest-only options.
- Sallie Mae — One of the largest private lenders, with competitive rates and broad eligibility.
- Ascent — Offers both cosigned and non-cosigned loans, including options for juniors and seniors that look beyond credit score.
- Earnest — Known for rate transparency and flexible repayment.
- ELFI — Competitive fixed rates for borrowers with strong credit.
Before borrowing privately, max out federal student aid first by filing the FAFSA. Federal loans carry fixed rates and access to income-driven repayment and loan forgiveness programs that private loans don’t offer. Then compare private lenders on rate, fees, cosigner requirements, and repayment flexibility.
How This Connects
Discover’s exit reflects a thinner private student loan market — fewer banks are willing to originate these loans, which makes comparison shopping matter more for families covering the gap between aid and the cost of attendance.
The College Investor tracks private lenders, rates, and refinancing options as the market shifts.
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Editor: Colin Graves
The post What Happened to Discover Student Loans? (And What to Do Now) appeared first on The College Investor.
