Like many people, when I started learning about student loans I only knew about one refinancing company. My wife’s loans started out with Sofi, but we decided to try student loan refinancing with CommonBond and we got a bonus too. I noticed that even though we started out with Sofi’s prime rate, the variable interest charge rose somewhat quickly.
CommonBond is a great referral partner for us. They’ve given Student Loan Planner readers one of the best cash bonuses for refinancing student loans anywhere. When you see if you could slash your interest rate through our bonus link, you’re eligible for up to $550 if you close a loan with them and we’ll get a bonus too. To get your $550, you’ll need to refinance more than $75,000. You get a $300 bonus if you refi more than $40,000. They’ll still refi smaller debt than that, you just wouldn’t get a bonus.
My wife and I decided to check out CommonBond for our own student loans for a couple reasons.
- We got a lower interest rate
- We got $500 cash back (bonus terms change over time, current one is up to $550)
- They fund a child’s education abroad for each loan they fund
There are other reasons why they might be appealing to you, but CommonBond has a special place in my heart because of the money they’ve saved us.
From a practical standpoint, you deserve to know how good their interest rates are, what kind of benefits they offer that other student loan companies do not, who should apply, how they’re different, and how much money you could save.
What is CommonBond?
There was a flurry of startup activity in the student loan space after the financial crisis. Federal student loans started charging really high interest, and private companies realized they could move into the space and create a win-win. The borrower gets a lower interest loan reflecting their higher income and the lender gets to profit from the loan. The only loser (as long as refinancing is the right thing to do) is really Uncle Sam.
CommonBond got started making loans to highly qualified MBA students. These folks would often borrow low six figures, get six-figure jobs, and quickly repay their debt.
Once the loans aged a bit, default rates were surprisingly low, and CommonBond got funding to make loans to a broader population. They’re located in New York City, while many of the other lenders have HQ out on the west coast.
CommonBond is also an online lender instead of a traditional big bank.
How Do CommonBond Interest Rates Stack Up Against the Competition?
If you’re a high-income individual, I always suggest checking them out because they’re going to be among the best offers out there. There is a fierce battle taking place right now over the dentist with $200,000 in debt who earns $200,000 as well. In most cases, I’ve seen CommonBond come out on top in these battles.
The latest rates are always listed on my student loan refinancing rates and terms page, but a typical range is anywhere from 3% to 5%.
If the ratio of your debt divided by your income is above 2, then CommonBond is likely not going to be super competitive in many cases. I’ve noticed they have a strong preference for folks who owe less than double their income, which makes sense.
I’ve also seen them offer less competitive interest rates to folks who have less than six figures in income.
However, out of the national lenders, you should expect CommonBond to show up in the top 3 almost every time if you have six figures of debt and income.
How is CommonBond Special Among the Student Loan Refinancing Companies?
As far as I know, CommonBond is the only major refinancing company that has a social mission at its core. Maybe you’ve heard of TOMS shoes (gives a pair of shoes away for each one sold) or Warby Parker (gives away a pair of glasses for each one sold).
For each refinanced loan, CommonBond gives money to a charity called Pencils of Promise, a non-profit that enables kids to go to school in developing countries.
While this is unquestionably good marketing, it’s also cool to see others benefitting educationally from doing something smart like cutting down your student loan interest.
Unemployment Protection with CommonBond
One of the biggest worries I hear from clients and readers is that they’ll refinance student loans, immediately lose their jobs, and then be totally screwed with the loss of income-based repayment and forbearance protections on federal loans.
While it’s true that when you refinance, you better be ready to pay back the debt, CommonBond takes a softer approach here. If you lose your job, you’ll be eligible to put your payments on pause for up to 24 months while you’re getting back on your feet.
Don’t refinance unless you have at least three months in the bank as an emergency fund. That said, refinancing with CommonBond minimizes the risk of refinancing.
The CommonBond 10 Year Hybrid Loan: Just Suck it Up and Go With a 5 or 7 Year Fixed Rate
The vast majority of refinancing with CommonBond is done with traditional fixed-rate loans.
Of course, student loan refinancing companies are trying to come out with ways to innovate since the field is so crowded. While most people should just pick a 5, 7, or 10-year fixed rate and pay it off, here’s how the Hybrid loan works in case you wanted something a bit different.
CommonBond gives you a fixed rate in the first five years and a variable rate in last five years. The main benefit of this kind of loan is that it gets you a lower interest rate at the beginning for taking on variable interest rate risk at the end. It’s a good option if you want a lower payment with lower interest in the beginning.
For the folks who’ve used this hybrid loan, they’ve liked the security of the lower required payments than a 5 or 7-year loan with the lower interest rate in the beginning. Surely, if you go with a hybrid loan your plan should be to pay it down faster than 10 years.
Honestly, if you have student debt, you should be thinking, “How do I get rid of this as soon as possible?” The hybrid loan is a well-intentioned product, but in reality CommonBond offers great fixed rate deals and you should just go with one of those in my view.
How Does Applying For CommonBond Work?
First, just click this link and you’ll be tagged with the up to $550 bonus. Next, you’ll submit a bunch of info about your income, debt amount, and other characteristics anybody lending you money would want to know about.
This is the “prequalified” rate search and takes only about 5 minutes. You’ll find out what estimated offer CommonBond could give you. This step has no impact on your credit score.
To get the finalized offer, CommonBond has to ask you for proof that you actually owe what you’re trying to refinance and that you earn what you say you do (makes sense if you think about it).
To make sure your information checks out, CommonBond (and any student loan refinancing company) will do a hard credit check. That will result in a small hit to your credit score similar to what happens when you open a credit card, so it’s nothing to be worried about. I just wouldn’t refinance right before locking in a mortgage.
If you want to comparison shop other places, that’s cool too. Just
- Don’t sign anything until you make your final decision, and
- Apply to multiple places within a 30-day window.
That way, you’ll only have 1 impact on your credit score from the hard inquiry since it’s considered rate shopping.
CommonBond Forgives Student Loans in the Event of Death and Disability
I think the death and disability feature is very important to have with a private lender. Federal loans have these important protections, and naturally, it would be a disaster to refinance your loans for a lower interest rate only to have something tragic happen and create a big financial burden for your family.
That’s why CommonBond will forgive loans for a borrower who passes away. This is a low probability event, but you should have ample term life insurance protecting you anyway.
For disability, only expect student loans to be forgiven if you can’t work anymore permanently. You will not receive forgiveness for something that keeps you out of work for a short period. Something catastrophic though will surely cause the loans to go away.
Refinancing Parent Plus Student Loans with CommonBond
CommonBond has been one of the easiest companies to work with for parents who are seeking to get rid of their 7% Parent Plus loans. You can choose to refinance them and keep them in your name.
If you’re the kid who benefitted from the loans, you can also take them off your parents’ plate.
Keep in mind that if you cosign for someone, you’re both still on the hook. With Parent Plus, I suggest that one person’s name alone be on the newly refinanced loan.
If your spouse has loans, then, in that case, I’ve seen a lot more people cosign for the debt. Just be aware of the legal ramifications and make sure to have plenty of disability and term life insurance.
How Does the $300 to $550 CommonBond Bonus Work?
Only people who complete the refinance process with CommonBond and who refinanced more than 75k will get the $550. You should expect to receive it in a couple weeks after the old loans get taken out and the new loan gets created.
The reason the bonus is that high is because I try to give away a majority of the referral bonus on my end to get readers better deals so they’ll tell their friends about Student Loan Planner.
Should You Refinance Your Loans with CommonBond?
I actually built a refinancing student loan quiz that you can take to see if we think you should be refinancing your student loans. In short, if you’re refinancing, you should owe less than double your income, work at a private employer, and want to get rid of your debt.
You should be a sound position financially and in your career, ready to get serious about destroying your student loan balance. Those pursuing 20-25 year loan forgiveness or the PSLF program should not refinance.
If you want to comparison shop, you probably won’t find any higher cash back bonuses, but you might find a lower interest rate. After reading this CommonBond loan refinance review, realize that the company won’t be the best in every situation, but it will be for a lot of you. This refinancing page has other lenders on there as well.
Questions about student loan refinancing with CommonBond? Click here to learn more and feel free to ask us questions or provide comments below!