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Why I Paid Off My Discover Loans First

Ah, Discover student loans. A topic of relief when I was in college–they quickly helped me fund my study abroad program’s housing costs. But once that program ended, they became a topic of disdain among both my family and friends.


First, I want to be clear that I found the process of taking out Discover student loans to be perfectly fine. Customer service was friendly, the application process was easy (especially for a young adult), and the loan amount was flexible. Moreso, what I appreciated the most about Discover was an initiative that encouraged me to pay a small amount ($50 total at $25 per loan) monthly towards my loans while I was in school so that I would graduate with the same amount of debt that I borrowed. Discover also has a “Good Grades” program which gives you 1% cash back for the amount that you took out pending your GPA. Not a lot, but it’s something. The reason I paid off Discover first would likely be the same for any privately-held student loan... But with that being said...


I came to loathe my Discover loans when I fully realized the high interest I was paying. While my federal student loans held interests ranging from 3 to 4%, Discover had whacked me with 9%. That is a huge difference. Unfortunately, when I took out the loan, I had no concept of how much time that loan would take to pay off–or how quickly the interest would accrue.



My first year out of college, I had little income and not too much financial savvy, so I generally paid the minimum on all of my loans, including Discover. As you may expect, this meant that my minimum payment barely made a dent. At one point, on an initial $6,000 loan, only $29 of my $75 monthly payment was going towards principal–that meant the other $46 was going to interest. Yuck. It was a disheartening realization that set me on the path towards financial freedom.


If you’re struggling to come up with a plan for paying off your student loan debt or have no idea where to start, a great first step is to find out how much you owe, what the interest rate is, and any other terms of the loan (like length). From there, you can decide if it makes more sense for your situation to pay the debt with the highest interest first (as



I did–this method is called the avalanche method) or the smallest debt first (this is called the snowball method).


Of course, I want to give the general disclaimer that what worked for my financial situation might not work for yours. As with all private loans, your interest rates and experiences may vary from mine, so it’s important to do the work yourself to see what makes the most sense for your financial situation. For me, I knew it was most important to remove private debt from my life (courtesy of Discover) so I could then tackle my more flexible payment options on my federal debt.


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