<p>Last year D got a private loan through Discover, with DH as co-signer. We got an excellent rate, 4.25% based on DH's great credit. </p>
<p>This semester, they are offering us 9.5%. :eek: They stated that this is based on his credit report from Transunion. So we pulled the Transunion credit report and score, and as we expected, found them to be in wonderful shape. No adverse accounts on the report and a score of 776. We are at a complete loss to understand why the rate more than doubled in 18 months when there were no negative credit events. Discover Customer Service refuses to explain.</p>
<p>Has anyone else had this experience with Discover this year? Are there any lenders who are rewarding good credit with good rates?</p>
<p>Do they consider that your H has already co-signed for a loan that is still outstanding to be a negative in some way?</p>
<p>I don’t know about Discover, but some families have reported difficulties getting 2nd, 3rd, etc co-signed loans because the co-signer’s credit was hurt by the previous co-signed loans.</p>
<p>However, the case with your H and your D may be different.</p>
<p>What would be the rate of a Parent Plus loan?</p>
<p>mom2college, Parent Plus is 7.9% or thereabouts. Of course, that loan is different from a private student loan; the loan is in the parent’s name, and payback begins immediately, not after graduation. </p>
<p>The existing student loan doesn’t appear on DH’s report; it’s D’s loan and appears on hers. There are no credit inquiries showing on his report other than the Discover application this week. And anyway, if the existing loan were considered a ding on his credit, wouldn’t that be reflected in the number? I simply cannot fathom how 776 results in 9.5%.</p>
<p>We could go with Discover and reduce the loan amount, and then pay it off quickly – it’s only a semester and not that big a deal. Or we could apply for a different student loan or Parent Plus, all of which require credit checks which would, of course, be a hit to DH’s credit. I’m just wondering if anyone else has found their Discover rates taking such a drastic jump for no apparent reason. Is this Discover only, or industry-wide? Is it worth bothering to apply elsewhere, or is this par for the course this year?</p>
<p>LasMa, they changed the rules on Plus loan repayment in the past few years. You don’t have to start the payback immediately on direct Plus loans and it should be fairly quick to apply and process the app. I found this Plus loan info on a SUNY site, but should apply to any school:</p>
<p>Oh thank you, sk8rmom. We’re seriously considering Parent Plus for this semester, and that info makes it a bit more attractive. </p>
<p>BTW, I spoke with an FA officer at D’s college today, and he said they are seeing very few private loans this year, and far more PLUS and Sallie Mae. It sounds like private banks may be moving toward getting out of the student loan business. That is certainly the only rational explanation I can think of regarding our 9.5%, and we won’t waste our time applying at Chase, Citi, Wells, et al.</p>
<p>LasMa, you and I (and a few others) discussed the private loan issue here back in the summer of 2009. Since you helped me out quite a bit then, I’m hoping I can help you now (just saw this thread tonight - hope it’s not too late to help you. I haven’t been on CC much lately.)</p>
<p>We also have pretty good credit scores. Summer 2009, Discover quoted us a rate quite a bit higher than the great 4.25% rate that you got - my memory’s not the greatest, but I’m thinking it was 7.5% or so (?). So we checked with Wells Fargo, and got their second-best rate - 5.74%. When we re-applied with Wells Fargo this past summer we were worried that we wouldn’t get a good rate, due to a probably-lower credit score because of last year’s loan. We were wrong - the rate was LOWER. They gave us a rate of 4.74% this time around!</p>
<p>Just for grins, we checked with Discover, and their rate was MUCH higher - don’t remember exactly, but it may have been in the 9% or so range they quoted you. We also checked with Chase. Their application process MAKES NO SENSE – they want you to complete the promissory note before they tell you what the rate is going to be, and it takes a week or more. What the heck?! I think we stopped the process at that point.</p>
<p>So - bottom line, I highly recommend that you apply at Wells Fargo. They are very helpful over the phone, and give you a rate quote pretty quickly (within an hour or so, IIRC) For those w/ good credit, the PLUS loans, with their high origination fees and fairly high interest rates, are just not a good deal.
Also, Wells Fargo announced in the past few days that (similar to PLUS loans) if the student were to die or become disabled, they would no longer be going after co-signers for payment of their private student loans.</p>