CommonBond Student Loan Refinancing Review
CommonBond is a student loan lender with several distinctions that make it different from the other student loan refinancing companies. The big points that might be of interest to you are: (1) social mission; (2) dedicated lawyer group; (3) Pre-Fi program; and (4) unemployment protection.
Social mission. CommonBond is the only student loan refinancing company that combines student loan refinancing with a social mission. If you refinance your loans with CommonBond, they’ll fund the education of a child in need through a partnership with Pencils of Promise. Pretty cool, huh? Pencils of Promise builds schools, supports teachers and even has a program to teach kids about potable water, sanitation and hygiene. I’m always a fan of programs that are looking at the root causes. Sick child = child unable to go to school to learn.
Dedicated lawyer group. If the social mission doesn’t encourage you to refinance your student loans with CommonBond, the fact that they have a dedicated lawyer group might help. Biglaw Investor has partnered with the team of folks at CommonBond that are specifically interested in helping lawyers refinance their loans. This group understands the bimodal salary distribution, the six-figures of law school debt and what it’s like for a young lawyer who just graduated from law school. They’re ready to work with you to find a creative solution to get the underwriters happy with your application and having direct access to them should make the loan process smoother.
Pre-Fi. As I said above, there’s a bunch of folks at CommonBond that are trying to come up with creative solutions for law students and lawyers specifically. I’ve had a lot of 3Ls write in saying that they can’t wait to refinance their student loans once they graduate and that it’s a bummer they have to pay the high interest rates during law school. That’s when CommonBond decided to roll out the Pre-Fi program, which is a way for 3Ls to refinance their loans while still in school based on the strength of a job offer letter.
Unemployment protection. CommonBond has your back if there comes a time when you’re not able to make regular payments. They give you the option of deferring payments or forbearance. In this case, it means you’ll be able to pause payments for a specified period of time.
- Soft credit check to get rates.
- Commonbond has a social mission which involves donating to Pencils of Promise for each funded loan.
- Has a lawyer group, so is particularly attuned to financial situation of lawyers.
- No prepayment penalty if you want to pay off your loans at any time during the life of the loan.
- No origination fee or application fee.
- Autopay discount of 0.25% on your interest rate.
- If you refinance using our links, you’ll get a $400 cashback bonus from Commonbond, thanks to the deal we’ve been able to negotiate with them for readers of the Biglaw Investor.
- Exists in a competitive marketplace, so may not always be able to offer the lowest rate.
- To qualify for the best rates, you will need excellent credit.
How Commonbond student loan refinancing works
Commonbond is a student loan refinancing lender. If you refinance your loans with CommonBond, they'll be responsible for dictating the loan terms, monthly payments, etc. and you'll work with CommonBond as your servicer to repay your student loans.
Here’s the steps you'll go through to refinance with CommonBond:
- Get Your Personalized Rate Estimate
- Review Rate and Decide on Next Steps
- Complete Full Application
Fill out a short form on CommonBond's website and answer personal information questions related to your education history, financial situation and the total loan amount that you want to refinance to start the application process. CommonBond will refinance both private student loans and federal student loans. You don't need to be a U.S. citizen or permanent resident to refinance with CommonBond. The following visa types are eligible for CommonBond student loan refinancing: H1-B, J-1, L-1, E-2, and E-3 so long as the applicants have graduated from a U.S. nonprofit undergraduate or graduate school. Nothing in this process results in a hard credit check, so you don’t have to worry about negatively affecting your credit score. Initially CommonBond will verify your identity and credit history to determine the loan products they can offer you, as well as if they're able to offer you a lower interest rate.
Next, you’ll be shown a dashboard with the variable rates and fixed rates available to you based on the soft credit check, along with the loan terms. You'll see that the variable rate loans are generally a better deal than the fixed rate loans and that the longer loan terms (i.e. the repayment period), the higher the interest rate. You'll almost always get the best interest rate if you're willing to accept a five-year repayment term with a variable rate.
Now that CommonBond has provided loan options, loan payments and any eligibility requirements, you can compare the proposal from CommonBond to your existing student loans. Since CommonBond does not charge an origination fee or a prepayment penalty, so long as the student loan refinance rate is lower than your current rate, it's likely going to save you money to refinance. After you’ve compared the loan rates to your existing student loans, if you decide to proceed with CommonBond you'll need to fill out a complete application which will result in a hard credit check and a credit report to confirm your rate. As long as you've entered the information correctly when doing the rate check, you should expect to receive the same rate once the hard credit check is complete.
Bottom line: What we look for when evaluating a student loan refinancing company
Refinancing your student loan debt is a significant investment of time and energy. You have to spend time filling out forms, waiting for an offer, evaluating repayment terms and monthly payments and then ultimately picking a lender. A solid student loan refinancing company can make your life better, not more difficult. Here's what we look at to arrive at our decision.
- Low interest rates. Nobody wants to waste their time completing an application only to find that you can refinance your loans for 0.05% savings on your interest rate. The number one priority of a student loan refinancing company should be offering you the lowest rate possible, thus saving you thousands of dollars. If a student loan refinancing company can't offer you a low rate, the rest doesn't matter. In particular, we look at how they handle graduate students (primarily law students, mba students and medical students) and whether they can offer you a better deal for your graduate student loans, since most of the readers of this site have a bachelor's degree and some type of graduate education and are primarily looking to find a lower interest rate on their graduate student loans after paying large sums to their graduate school (both in terms of tuition and cost of attendance numbers).
- Ease of use. For many people, refinancing student loans is a necessary evil. You know you're paying too much interest. You know you'll save thousands once you get it done. But you'd rather be outside playing than stuck inside entering your home addresses for the 10th time. If you're going to put in the effort to refinance your student loans, a pleasant and easy-to-use interface can make the chore more enjoyable.
- Borrower protections. You're giving up the federal loan protections by refinancing your loans, so you want to be sure that the lender you're using has similar protections in place (e.g. economic hardship, deferment, cosigner release, grace periods, etc.). Thankfully most lenders offer decent protections for things like unemployment or financial hardship, but it's important criteria that we review.
- Flexible repayment options. Depending on where you are in your career, you may want to double down and pay everything off with a five-year variable rate or you might prefer to apply with a co-signer and get the lowest payment possible over a 25-year term while you figure out your next career move. Regardless, flexibility in repayment options (whether it's term length or the ability to switch between variable and fixed interest rates) is an important factor to consider when evaluating a student loan refinancing company.
Who are CommonBond's competitors?
CommonBond is a solid student loan refinancing company with a legitimate chance of giving you a great deal that results in an interest rate reduction on your school loans but to get a full sense of the interest rates available to you it's a good idea to check out the competition. The list below includes the other student loan refinancing companies that you may want to consider when searching for the lowest interest rate.
- Earnest. Flexible repayment plans allows you to pick your own term. Financially backed by Navient, giving them some of the lowest interest rates available in the current market.
- First Republic Bank. This is a traditional bank looking to build a long-term customer relationship with you and is willing to refinance your student loans at below-market rates to build the relationship. You'll be required to open up a checking account, initiate direct deposit of your paycheck, and jump through other hoops, but if you're willing to do so they offer the lowest rates available.
- SoFi. SoFi is by far the largest lender in the student loan refinancing market. They may not be able to offer you the best rate as they can rely on their brand name to bring in borrowers but there are lots of other perks when you refinance with SoFi and they are actively expanding their products if you're interested in keeping your financial life with one company.
- Credible. Known as the "Kayak of student loan refinancing", Credible offers you access to a marketplace of lenders. Fill out a form once and Credible will pre-qualify you with a bunch of lenders to get rates (soft credit check). To confirm the actual rates, you'll have to continue the application with the individual lender.
- LendKey. If you're looking to borrow from a local credit union, LendKey is the lender for you. They partner with local banks and credit unions to offer you student loan refinancing in your neighborhood.
- ELFI. A relatively new player, ELFI is backed by SouthEast Bank, a retail bank that recognized the value of getting into the student loan refinancing market. More competition is always better and if you end up with multiple offers, you can use them to play off the various student loan refinancing companies to get the best deal for you.
- Splash Financial. Splash Financial is based in Cleveland and one of the newest players in the refinancing space. Originally they only offered loans to medical residents and fellows but have recently been expanding thanks to a partnership with Pentagon Federal Credit Union (PenFed).
- Laurel Road. Primarily a good option for medical professionals (which seem to be their target audience), Laurel Road is an option for parents that want to refinance Parent PLUS loans in their child's name.
CommonBond is an established student loan refinancing company that has raised over $1.6 billion of capital from investors and is a legitimate way to refinance your student loans in the private student loan lending market. They have also partnered with Pencils of Promise if you believe in working with companies that have a social mission.
No. CommonBond will perform a soft credit check using just your name, address and date of birth. Soft credit checks do not negatively affect your credit score, no matter how often they take place. If you proceed with a full application after getting pre-qualified, all lenders will perform a hard credit check which will have a minimum impact on your credit score.
CommonBond is a private company founded by David Klein, Jessup Shean and Michael Taormina. It's received over $1.6 billion in financing and has various investors from private equity to institutional investors.
Yes. CommonBond has no prepayment penalty, so you can refinance your existing CommonBond student loan with no penalties either with CommonBond directly or with another lender.
CommonBond requires a minimum FICO score of 660 to refinance your student loans.
CommonBond is headquartered in New York City.
CommonBond makes money in the student loan refinancing market by bundling and selling student loans in securitization packages. Institutional investors, such as pensions and insurance funds, purchase the securitized package of loans from CommonBond at an upfront premium in exchange for the future potential cash flow from the loans as borrowers pay back their student loans.
For example, if CommonBond is selling a package of student loans worth $100 with a 10% interest rate that are due in one year, an institutional investor might be willing to pay $104 for the package today on the belief that at the end of the year they will receive $110 for a 5.7% return ($110/$104).
Each lender will only pay you a cash back bonus one time, no matter how many times you refinance with them. However, if you refinance your student loans with another lender, you can collect a second, third, fourth, etc. cash back bonus so long as each lender is new to you.
CommonBond does charge a late payment fee of 5.00% of the unpaid amount of the payment due or $10.00, whichever is less, and a return check fee of $5.00, subject to state law restrictions.
CommonBond's network has expanded to more than 2,000 Title IV accredited universities or graduate programs. After that, they'll consider your credit history and other factors to quickly make a decision on your application.
- Interest Rates: 1.99%+
- Bonus Cashback: $400
- Loan Types:
- Loan Terms:
- Minimum Credit Score: 660
- Rating: 9/10
- Visit CommonBond