About CommonBond Student Loans
You need money, but taking out a loan can be a long, painful process. So why bother, especially when you’re going to have to jump through umpteen hoops, only to be slapped with a declination at the end of it all?
To help alleviate these concerns for those with great credit, CommonBond Student Loans was created to offer a better way of offering competitive pricing, a “simple, tech-enabled experience,” and best-in-class customer service. This applies whether you’re taking out a new student loan, refinancing existing ones, or looking for a personal loan—or whether you’re looking to get a lower interest rate or decrease your monthly payments.
To accomplish this, the CommonBond process works over 4 steps:
- Fill out the easy online application, which will only take minutes.
- Get your rates and find out how much you’ll save. Again, you could be approved in minutes.
- Upload required documents, such as files, photos, and screenshots to “confirm your identity and loan information.”
- Save money, with no hidden fees or prepayment penalties.
Compared to the competition, CommonBond claims to make the process faster and easier due to “relationships with every school in [their] network.” They also feature a built-in “CommonBond Family” that provides access to networking events, career connections, and much more.
Every few years, it seems a new business buzzword (or phrase) catches fire. In the past, it’s been ‘paradigm shift,’ ‘synergy,’ and other similarly fashionable jargon. Recently, we’ve noticed ‘disrupting finance’ emerge from online lenders like CommonBond.
When it comes down to it though, do CommonBond’s Student Loans deserve this moniker, or is it just a marketing angle? Should you choose them, or are there better options? Let’s dive in and explore.
CommonBond Rates, Fees, & Eligibility
We’re going to start off here by spending a decent amount of time outlining CommonBond’s nitty-gritty details. Why? Because it’s been our experience that these details are what truly distinguishes one student loan provider from another (we’ll come back around to this thought soon):
How Much Will You Pay for a CommonBond Loan?
After spending a few minutes applying, CommonBond claims they’ll be able to process your request in just a few more minutes. In some instances, if they need a document or two from you, it can take 1-3 business days for you to receive an approval.
Once approved, these were the rates you could expect at the time of our research:
- New Student Loans: 10-year option at 6.05%, or a 15-year option at 6.60%
- Refinance Loans: 2.14%-5.94% variable, 3.50%-7.74% fixed, 3.79%-6.23% hybrid (more about this in a second), with 5, 7, 10, 15, and 20-year repayment terms
- Parent Plus Refinance Loans: Starting at 2.14% APR
- MBA Loans: Starting at 6.23% APR
- Personal Loans: Between 4.74% and 11.74%, depending on repayment term (2-7 years) and loan type (fixed or variable)
Your exact rate will depend on several underwriting criteria, including your choice of a variable or fixed loan, the length of the loan, and your credit score. You might be able to add a cosigner in order to change rate on undergrad loans, although MBA loans are not eligible for a cosigner.
All loans are eligible to receive a 0.25% reduction in the interest rate by enrolling in ACH withdrawal.
Pro tip: Check out CommonBond’s Loan Rates page for a detailed overview of how each option can affect your payments.
CommonBond claims they don’t charge any hidden fees, but keep in mind that there’s a 2% origination fee on MBA loans, which is “added to the principal balance of the loan at the time the loan proceeds are disbursed, and will be repayable as part of the repayment term of the loan.”
Are You Eligible for a CommonBond Student Loan?
All CommonBond’s loan products are only available to United States citizens or permanent residents.
While the maximum borrow amount can vary by school, CommonBond won’t lend more than $110K per academic year for undergraduate and MBA programs (be sure to read through their FAQ for eligible MBA programs), or refinance more than $500K.
To be eligible for refinancing, you’ll need to have “graduated from a selection of more than 2,000 Title IV accredited universities or graduate programs,” as well as certain loan types. Personal loans are available between $1,000 and $50,000.
To initially determine your eligibility, CommonBond with perform a “soft” inquiry to estimate your rate, which won’t affect your score. After completing the application, a “hard” inquiry will be performed that may impact your score.
What happens after you’ve been approved for a CommonBond Student Loan?
CommonBond’s Repayment Terms
If you took out a standard CommonBond loan (new or refinanced), you’ll be presented with three different repayment options:
- Full Principal & Interest: Pay the full amount due each month, which allows you to start spreading out your payments from the get-go. This is also the fastest way to pay off your loan and the easiest way to avoid excess interest accruing.
- Interest-Only Payments: Instead of also paying principal, you’ll only make payments based on the interest that accrued over the course of a month. This allows you to “make a dent” in your interest while you’re still attending school.
- Full Deferment: Here, you won’t pay anything on your loan while enrolled in school, or during your 6-month grace period following graduation or termination of employment. It appears interest will continue to accrue on your loan during this time.
Some of these same repayment terms also apply to CommonBond’s MBA loans, with a few meaningful differences:
- Full Principal & Interest: The same as with standard loans, except (as we outlined above) repayment occurs only over 10 or 15 years.
- Interest-Only Payments: Not available with CommonBond’s MBA student loans.
- Full Deferment: Here, interest and principal are deferred for up to 6 months.
Again, for a better idea of how these options can affect your repayment amount, take a look at CommonBond’s loan costs calculator.
In addition to what we’ve already discussed, CommonBond might be able to temporarily postpone making monthly payments for a specific period of time based on economic hardship (known as forbearance).
Have questions about CommonBond’s rates, fees, and eligibility? Customer service can be reached at (800) 975-7812.
What’s Up with CommonBond’s Hybrid Student Loans?
The HighYa team has reviewed several of the most popular student loan providers (more about this next), although we’ve yet to encounter anything quite like CommonBond’s Hybrid Loans.
In this case, you’ll have a fixed rate for 5 years, which will then switch to a variable rate for another 5 years. According to the company, this can provide several advantages:
- Offers lower interest rates (and more manageable payments) than what you’re likely to find with the company’s other products, or from the competition.
- Saves you money on total interest over the life of the loan.
- Might be an ideal option for those who plan to pay off their loans within 5 years (early payoff).
Outside of their Hybrid Loan, are there any other major differences between CommonBond and the competition?
What’s the Difference Between CommonBond & Other Student Lenders?
If you’re in the market for a student loan, the good news is that you have lots of options—but that’s also the bad news. After all, how can you really distinguish between them? We’ll quickly lay it out here:
College Ave Student Loans
College Ave’s APRs range between 2.20% and 11.24%, with a minimum $2K loan amount ($5K refinance amount). You’ll be able to choose nearly identical repayment terms as with CommonBond, and they make similar claims about ease of applying and receiving an approval.
SoFi is a marketplace (also known as a peer-to-peer) lender, which means they obtain their loans through direct investors, instead of banks like traditional lenders. The company claims this allows them to provide lower interest rates (starting at 1.9% APR at the time of our research), which seems to play out in reality.
SoFi claims this peer-to-peer model also allows them to implement less stringent underwriting criteria, faster approvals, and less paperwork.
LendKey works directly with 300+ credit unions and local banks, which they claim can help you achieve a lower rate. These rates started at 2.14% during our research.
It appears that LendKey offers some repayment options (such as the ability to pay interest-only for the first four years of your loan), but not as much as CommonBond and others.
Earnest claims to be unique in that they specialize in individuals who may have a great credit score, but not necessarily a lengthy credit history (such as recent grads). This is what they call their “merit-based” model.
Interest rates varied between 2.13% (which is the lowest among all student loan providers we’ve reviewed to date) and 11.95%.
Earnest’s Precision Pricing allows you to change your payment amount, due date, and even switch between fixed and variable APRs on the fly through your personal dashboard. Of all the student lenders we’ve reviewed, this is the most flexibility we’ve seen yet.
Like every one of these other lenders, CommonBond claims to provide quick and easy loan applications and approvals. Since they specialize in those with great credit though, they might not be your first option if you have a less-than-stellar score or short credit history.
As we detailed above, CommonBond’s Hybrid Loan option is quite unique, and seems to be attractive for those interested in paying off their loans within 5 years. If you lose your job, CommonBond seems to be unique in that they’ll help you find work, although no additional information is provided on their website.
From a costs perspective, CommonBond’s 2.14% interest rate also matched LendKey’s.
Before moving on, let’s talk about one other way CommonBond claims to be unique.
How Valuable Is the CommonBond Family Program?
Perhaps as a nod to CommonBond’s name, the company provides something they call a Family program. In this instance, it’s best for them to explain it in their own words:
“We like to think of our community as our family: a group of optimistic people who believe in the power of new ideas to change the world. The community comes together in several meaningful ways: networking opportunities, panels and speaker events, dinners in cities across the country, career assistance, and support of our non-profit partners. As the CommonBond Family grows, we will continue to host events to connect our members to incredible people (including each other) who can help them grow personally and professionally, and to offer direct opportunities for our members to take action in their own communities.”
No doubt, this all sounds great! But after reading through the company’s FAQ, this currently only involves CommonBond’s referral program (affiliates earn commissions for sales they refer), joining the company as an employee, reading their blog and newsletter, and/or checking out their social media pages.
Again, these perks aren’t anything to sneeze at, but they might not currently be as community-engendering as CommonBond’s marketing department might make it seem.
Who Created CommonBond Student Loans?
CommonBond was founded in 2011 by David Klein, Mike Taormina, and Jessup Shean, who met while attending Wharton’s MBA program. After experiencing the painful loan process, high rates, poor service, and confusing processes rampant within the industry firsthand, they decided there had to be a better way.
This, combined with their backgrounds in finance and debt, led to the formation of CommonBond.
Compared to a lot of other companies, CommonBond also focuses on having a social impact through their Social Promise: “for every degree fully funded on the CommonBond platform, we fund the tuition of a student in need for a full year through our partnership with Pencils of Promise.”
CommonBond Reviews: Is it Popular Among Students?
StudentLoanSherpa gave CommonBond a “great” overall rating, and stated that they could be an ideal option if you have a great credit score, good income, and “plan on aggressively paying off your student debt.”
What does this mean, specifically? According to NerdWallet, you’ll need a minimum credit score in the 600s, although there’s no official minimum income qualification. However, CommonBond’s typical borrower has a 750+ credit score and an annual income of $100K. They also called CommonBond’s Hybrid Loans “risky.”
From a company perspective, CommonBond, based out of NY, NY, had a B+ rating with the Better Business Bureau at the time of our research, with 2 closed complaints (as of 6/9/16). Both of these referenced dissatisfaction with CommonBond’s “hard” credit inquiries.
Note: Depending on the type of loan you take out (as well as if you’re an international postgraduate student), your actual loan might be funded through Bank of Lake Mills, Union Bank and Trust Company of Lincoln, Nebraska, or CommonBond Lending, LLC.
Whew! We’ve covered a lot of ground here, so let’s wrap things up.
Is CommonBond an Uncommon Student Loan Provider?
We mentioned it previously, but it bears repeating: We spent so much time talking about CommonBond’s nitty-gritty details today because these are what often distinguish one student loan provider from another.
After all, it’s pretty standard for companies to claim they provide fast application processes and approvals, along with stellar customer service. But it’s your interest rates and repayment terms that ultimately decide whether or not you’re getting a solid value.
From this perspective, while CommonBond’s interest rates aren’t the lowest of the student lenders we’ve reviewed, they definitely seem competitive. On top of this, industry professionals seem to give the company high rankings, although they might not be your first option if you have a lower credit score.
On the other hand, with their multiple repayment options and Hybrid Loans, CommonBond might be at the top of your list if you’re looking to pay off your student debt quickly. They also give back some perks typically only found with federal loans (e.g. forbearance), which could always come in handy in today’s uncertain economy.
What’d you experience with CommonBond Student Loans? Was the application and approval process as quick and easy as you were expecting? Did you score a solid interest rate? Tell us the details in your very own review below!