Discover stopped accepting new student loan applications on January 31, 2024, and sold its entire private student loan portfolio (approximately $10.1 billion) to Carlyle and KKR. While loans are being transferred to Firstmark Services for servicing, existing customers can still manage accounts via the Discover portal, but new loans are not available.
Key Takeaways
Discover exited student loans due to regulatory violations and costly servicing issues. CFPB orders in 2015 and 2020 exposed major compliance and communication failures. Discover lacked advanced servicing tools needed for modern loan management demands.
Discover sold its private student loan portfolio to strategic partnerships led by Carlyle and KKR, with Firstmark Services (a division of Nelnet) taking over servicing for existing loans, following Discover's exit from the student loan market in early 2024 to focus on other areas and address past regulatory issues.
Discover Financial Services will sell a portfolio of private student loans to Carlyle and KKR for up to $10.8 billion, the credit card company announced last week. Firstmark Services, a division of Nelnet, will assume responsibility for servicing the portfolio upon the sale.
Sallie Mae loans, Discover loans and other private student loans can't be forgiven. In fact, there are actually no official student loan forgiveness programs for any private student loan company.
The main controversy surrounding Discover (Discover Financial Services) involves its widespread, 17-year practice (2007-2023) of misclassifying millions of consumer credit cards as commercial cards, leading to over $1 billion in inflated interchange fees for merchants, prompting major FDIC/Federal Reserve penalties, restitution orders, and a significant class-action settlement. Other issues include regulatory scrutiny over consumer compliance, a lawsuit by a former executive alleging discrimination, and ongoing debates about higher merchant fees in general.
If you repay your loans under an IDR plan, the end of term balance on your student loans may be forgiven after you make a certain number of payments over 20 or 25 years (240 or 300 monthly payments). Use Loan Simulator to compare plans, estimate monthly payment amounts, and see if you're eligible for an IDR plan.
Your issuer may close your credit card account for a few reasons, including inactivity, fraud, missed payments, or changes to your credit score.
The "7-year rule" for student loans generally refers to when negative marks, like defaults, are removed from your credit report (around 7 years after the first missed payment or default date for federal loans, 7.5 years for private loans), but the debt itself doesn't disappear and must be paid off; it's also a benchmark in bankruptcy proceedings where federal loans can become dischargeable after 7 years from when payments were due, though proving "undue hardship" is required and difficult.
Discover sold its private student loan portfolio to strategic partnerships led by Carlyle and KKR, with Firstmark Services (a division of Nelnet) taking over servicing for existing loans, following Discover's exit from the student loan market in early 2024 to focus on other areas and address past regulatory issues.
Interest began accruing under this forbearance on Aug. 1, 2025. This forbearance will last until the legal situation changes or servicers are able to send bills to borrowers at the appropriate monthly amount. Furthermore, time spent in this general forbearance will not count for PSLF or IDR forgiveness.
You may be eligible to recover funds from the $1.22 billion Discover Class Action Settlement regarding overcharged interchange fees if your business accepted Discover credit cards for payment between January 1, 2007, and December 31, 2023.
Discover Financial Services, Inc. U.S. Discover was acquired by Capital One on May 18, 2025. As a result of the acquisition, all Discover Financial brands would be offered as the Capital One brands and services.
Some reasons credit card companies may decline transactions are that your purchase exceeds your credit limit, or the purchase is in a location where you don't normally shop. If the credit card issuer declines your transaction, it's a good idea to call the number on the back of your card and find out why.
The best way to pay off student loans involves a combination of strategies: pay more than the minimum, use the avalanche method (highest interest first) for savings or snowball method (smallest balance first) for motivation, automate payments to save on interest, consider refinancing for lower rates (federal loans lose benefits), and explore federal income-driven plans (IDRs) or Public Service Loan Forgiveness (PSLF) if eligible. Budgeting, increasing income, and tackling extra payments with bonuses or refunds also significantly speed up repayment.
You may be able to negotiate to pay off the debt
A creditor may agree to a debt settlement and accept less than the total amount you owe. It's best practice to secure a written agreement of any negotiated amount or monthly payment plan you make with a collector before you make a payment.