Q: I just received a notice explaining that my student loan was bought by Discover. Why did this happen and what should I do?
A: In September, Discover bought about $2.5 billion in student loans that were previously owned by Citi. You’ve probably received a notice in the mail or heard about it on the news, and may be wondering about how it will affect you. While a few things may change, the ownership of your student loan shouldn’t affect you too much—either way you’re still required by law to pay. Your interest rate may change some, but if it was going to, it probably already has.
One small difference between the two companies is their write-off rate. Citi has a higher write-off rate than Discover, meaning that they were willing to cancel more students’ loans and not require any more payments from these lucky borrowers. Still, over 95% of students are required to pay off their student loans with both companies. Only in cases of extreme hardship will this even be an option, so this won’t affect most of you.
The best advice here is to continue paying on your loan. Pay it off as fast as you can, especially if your rate has increased. Of course, if you have credit cards or other debt at a significantly higher rate, it’s best to pay that off first. Your student loan is a high priority too, though, since it’s very unlikely that you’ll be able to get rid of it, even if you go through bankruptcy. As mentioned above, student loans have a very low discharge rate.
If you want any more information about the new owner of your student loan, you can check out some reviews of Discover’s student loan program online. A basic review can be found at this website.