Discover to enter student loan refi market

|About: Discover Financial Services (DFS)|By:, SA News Editor

Until now, just a handful of lenders are in the business of refinancing student loans, with just Wells Fargo and SunTrust among the only two of the seven largest banks in the private loan market doing so. But RBS's Citizens Financial just rolled out a refi product, and Discover (DFS -2.4%) chief David Nelms tells American Banker his company plans to follow suit.

Discover made more than $1B in private student loans in 2013 - 13% of the company's total loan production. For now, low variable rates make the business a discouraging one for lenders, and for borrowers, there's not a ton of incentive to refinance. Private loans typically have rates higher than government ones and have fewer consumer protections.

Still, should the trend catch fire, those lenders without a program in place could find themselves losing market share.