CommonBond Refinancing Review
The next article in this review series focuses on a lender with a little bit of a different approach and philosophy to student loan refinancing. CommonBond got its start in the Wharton Business School’s incubator program, also known as the Wharton Venture Initiation Program.
CommonBond launched in November of 2012, and by that time, they had picked up around $3.5 million in funding. It started by lending to Wharton Business School alumni. By September of 2013, the company expanded to 20 MBA programs across the U.S. and raised over $100 million in equity.
While the company is a “for-profit” enterprise, it adopted an unheard of model in the loan industry. CommonBond founders decided to follow in the footsteps of TOMS founder Blake Mycoskie and began offering a “one-for-one” loan program.
For the uninitiated, a one-for-one business model essentially offers a service to an underserved community for every piece of business it brings in.
CommonBond’s version of this is pretty simple: for every degree CommonBond fully funds, they will fund a year of education for a student in need in a foreign country. In addition to their international program, CommonBond also partnered with the GLOW foundation and KIPP Charter Schools to help improve the financial literacy of underserved communities in the U.S.
CommonBond has had nothing but success since its inception, and is now servicing over 2,000 universities across the U.S.
What does CommonBond Offer?
CommonBond offers the same general loan programs that its competitors, like SoFi and Earnest, offer.
However, before we get into what they offer, you should know that if you have federal student loans, these are the things you get that aren’t offered by private lending companies:
· Loan Extension: with federal loans, not only can you extend beyond the normal 10 years, some programs allow you to extend the length of your loans up to 30 years.
· Income Based Repayment: with federal loans, you can make payments based on your income, and not on a strict amortization schedule.
· Loan Forgiveness: There are a couple of programs that forgive student loans, whether it’s through working in the public sector, or some other way.
Once you go private, you lose these benefits. However, you still get some pretty good things if you refinance your federal loans into a single, private loan.
First off, CommonBond’s interest rates knock the socks off the federal rates. They start at 2.14% (with autopay) to 7.74% (also with autopay). They offer variable, fixed, and hybrid interest rates:
· Variable Rates: 2.14% to 5.94%
· Fixed Rates: 3.50% to 7.74%
· Hybrid Rates: 3.79% to 6.23%
In addition to their industry-low rates, CommonBond also offers other nice perks:
· No Hidden Fees: there are no application fees, no loan origination fees, and no prepayment penalties.
· Loan Forbearance: if you have a difficult time making payments, borrowers can pause their payments, and CommonBond will help them find a job if needed.
· $500,000 loan limit: CommonBond has one of the highest, if not the highest then very close to the highest, loan limits out there.
Finally, CommonBond has industry-standard loan lengths. You can find terms ranging from 5, 10, 15, and 20 years.
What loans aren't eligible for CommonBond refinancing?
While CommonBond is big loan company, they do have limitations on what kinds of loans they are willing to refinance. Keep reading to find out what those loans are:
1. Personal loans: these would be loans taken out by a student to fund expenses not related to a borrower’s education … like a marriage.
2. Loans from family and friends: these would include any loans from other people you know. They basically count as personal loans.
3. Bar Study Loans: these are loans specifically give to law school graduates studying to take their local bar exam. In case you’re wondering, bar study loans aren’t certified by schools as qualified education expenses. So, if you have one of these, and you want to go with CommonBond, you’re out of luck.
That’s it, though. You can refinance everything else. That would include private student loans, corporate-sponsored loans, and international student loans.
CommonBond Eligibility Requirements
CommonBond focuses on creditworthiness, and places a premium on credit score and credit history. If you don’t have a good credit score, and your credit history is lacking, you will need to get a cosigner. Typically, a credit score of at least 660 is needed to be considered for refinancing. In addition, you should have a debt-to-income ratio of no more than 40%.
Furthermore, all borrowers need to be U.S. citizens or permanent residents. They also need to graduate from one of over 2,000 Title IX accredited schools approved by CommonBond.
How to Apply
Applying is pretty simple. Just go to CommonBond’s website and follow the “get your rate” button. Once there, just fill out the information they request.
Once you do that, CommonBond will do a soft credit pull, which doesn’t affect your credit score, unless you’ve have a bunch of them in the last two years. Once they do the soft pull, CommonBond will give you an estimated rate.
After you get your estimated rate, you can go ahead with the application. When you do the actual application CommonBond will do a hard credit pull. Remember, these once affect your credit score.
You will also need some documentation to apply with CommonBond:
1. Proof of employment: either a letter of acceptance from your future employer, two recent paystubs, or two years of tax returns.
2. Recent loan statements: you will need to supply the most recent statement for each loan you wish to refinance.
3. Proof of residence: finally, you’ll need to provide your driver’s license, a recent utility bill, or a recent bank statement.
CommonBond is one of the better loan companies out there. While their reputation might not be the same as SoFi, or Earnest, you can’t argue with their one-to-one approach to business.
All things being equal, if you’re going to refinance your loans, you might as well refinance with a company that is trying to make a big difference with your money.
The only problem is that a low credit score will really hurt your chances of getting approved. While that’s the same as with the other student loan companies, it more true with CommonBond.
 In case you were wondering, a hybrid interest rate is fixed for the first five years of the loan, and then variable for the second 5 years.