Updated July 27, 2016
CommonBond was founded by three Wharton MBAs who felt the sting of student loans after they graduated. The founders decided to provide a better solution for graduates, as they thought the student loan system was broken and in need of reform. As a result, they strive to make the refinance (and borrowing) process as simple and straightforward for graduates as possible.
CommonBond* began by servicing students from just one school, and has rapidly expanded. Today, CommonBond loans are available to graduates of over 2,000 schools nationwide. Although the business started servicing only students with graduate degrees, today CommonBond is also available to refinance undergraduate degrees as well.
As you might be able to tell by the name, CommonBond thinks of its community as family. There is a network of alumni and professionals within the community that want to help borrowers. This alone sets it apart from other lenders, as members often meet for events.
While these are all great things, we know you’re more interested in how CommonBond might be able to help you make your student loans more affordable. Let’s take a look at what terms and rates they offer, eligibility requirements, and how they compare against other lenders.
Refinance Terms Offered
CommonBond offers low variable and fixed rate loans. Variable rates range from 2.14% – 5.94% APR, and fixed rates range from 3.50% – 7.74% APR.
Note that these rates take a 0.25% auto pay discount into consideration.
There is no maximum loan amount. CommonBond will lend what you can afford to repay. CommonBond offers fixed and variable rates with terms of 5, 10, 15, and 20 years.
The hybrid loan is only offered on a 10 year term – the first 5 years will have a fixed rate, and the 5 years after that will have a variable rate.
CommonBond has a great chart listing repayment examples based off of borrowing $10,000, which can be found on its rates and terms page.
To pull an example from that, if you borrow $10,000 at a fixed 4.74% APR on a 10 year term, your monthly payment will be $104.80. The total amount you will pay over the 10 year period will be $12,575.90.
The Pros and Cons
CommonBond is available to graduates of 2,000 universities. While that is a very long list, not all colleges and universities are included.
One pro to consider is the hybrid loan option available. It might seem a little confusing at first – why would someone want a variable rate down the road?
If you’re confident you’ll be able to make extra payments on your loan and pay it off before the 5 years are up, you might be better off going with the hybrid option (if you can get a better interest rate on it).
This is because you’ll end up paying less over the life of the loan with a lower interest rate. If you were offered a 10 year loan with a fixed rate of 6.49% APR, and a hybrid loan with a beginning rate of 5.64%, the hybrid option would be the better deal if you’re intent on paying it off quickly.
What You Need to Qualify
CommonBond doesn’t list many eligibility requirements on its website, aside from the following:
- You must be a U.S. citizen or permanent resident
- You must have graduated
CommonBond doesn’t specify a minimum credit score needed, but based on the requirements of other lenders, we recommend having a score of 660+, though you should be aiming for 700+. The good news is CommonBond lets you apply with a cosigner in case your credit isn’t good enough.
Documents and Information Needed to Apply
CommonBond’s application process is very simple – it says it takes as little as 2 minutes to complete. Initially, you’ll be asked for basic information such as your name, address, and school.
Once you complete this part, CommonBond will perform a soft credit pull to estimate your rates and terms.
If you want to move forward with the rates and terms offered, you’ll be required to submit documentation and a hard credit inquiry will be conducted. CommonBond lists the following as required:
- Pay stubs or tax returns (proof of employment)
- Diploma or transcript (proof of graduation)
- Student loan bank statement
- ID, utility bills, lease agreement (proof of residency)
CommonBond also notes it can take up to 5 business days to verify documents submitted, so the loan doesn’t happen instantaneously.
Once your documents are approved, you electronically sign for the loan, and CommonBond will begin the process of paying off your previous lenders. It notes this can take up to two weeks from the time the loan is accepted.
Who Benefits the Most from Refinancing Student Loans with CommonBond?
Borrowers who are looking to refinance a large amount of student loan debt will benefit the most from refinancing with them.
Keeping an Eye on the Fine Print
CommonBond does not have a prepayment penalty, and there are no origination fees nor application fees associated with refinancing.
As with other lenders, there is a late payment fee. This is 5% of the unpaid amount of the payment due, or $10, whichever is less.
If a payment fails to go through, you’ll be charged a $15 fee.
It’s also noted that failure to make payments may result in the loss of the 0.25% interest rate deduction from auto pay.
Getting in touch with a representative is simple and there is a chat and call option right on the homepage. Some lenders have this hidden at the bottom, or they don’t offer a chat option at all.
CommonBond also lets borrowers know they can shop around within a 30 day period to lessen the impact on their credit.
It does not list its late fees on its website, unlike other lenders. However, after making a chat inquiry, the question was answered promptly.
CommonBond does offer a cosigner release and is ranked with a A+ transparency score.
Alternative Student Loan Refinancing Lenders
The student loan refinancing market continues to get more competitive, and it makes sense to shop around for the best deal.
One of the market leaders is SoFi. It’s always worth taking a look to see if SoFi* offers a better interest rate.
The two lenders are very similar – CommonBond offers “CommonBridge,” a service that helps you find a new job in the event you lose yours. SoFi offers a similar service called Unemployment Protection.
SoFi’s variable rates are currently 2.15% – 5.95% APR with autopay, and its fixed rates are currently 3.50% – 7.74% APR, which is in line with what CommonBond is offering.
SoFi also doesn’t have a limit on how much you can refinance with them.
Another lender to consider is Earnest. There is no maximum loan amount, and Earnest has a very slick application process. Interest rates start as low as 2.15% (variable) and 3.50% (fixed).
Lastly, you could check out LendKey. It offers student loan refinancing through credit unions and community banks, but only offers variable rates in most states and fixed rates in a select few. The maximum amount to refinance with an undergraduate degree is $125,000, and the maximum amount to refinance with a graduate degree is $175,000.
All three of these options provide forbearance in case of economic hardship and offer similar loan options (5, 10, 15 year terms).
Don’t Forget to Shop Around
As CommonBond initially conducts a soft pull on your credit, you’re free to continue to shop around for the best rates if you’re not happy with the rates it can provide. As the lender states on its website, if you apply for loans within a 30 day period, your credit won’t be affected as much.
Since CommonBond does have strict underwriting criteria, you should continue to shop around and don’t be discouraged if you are not approved. The market continues to get more competitive, and a number of good options are out there.
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