CommonBond Student Loan Refinancing Review
Written by: Louis DeNicola
Private student loan companies offer student loan refinancing, a process that lets you take out a new student loan to pay off your existing student loans. While there may be pros and cons to consider, particularly if you have federal student loans, refinancing could lead to a lower interest rate on your loans, lower monthly payments and long-term savings.
Since you’ll be applying and taking out a new loan, you may want to compare different lenders before refinancing. Lenders may offer varying interest rates, which could directly impact how much you pay for your new loan, and there may be differences in benefits and fine-print terms to consider.
CommonBond, an online-only lender, is one of the lenders that you may want to consider if you’re thinking about refinancing your student loans.
Table of contents
What is CommonBond
CommonBond student loan refi in a nutshell
How CommonBond compares to other lenders
What it takes to qualify
Who is CommonBond best for?
What to expect during the application process
How to compare student loan refinancing offers
What is CommonBond?
CommonBond is an online-only lending company that was founded in 2011 and is based in New York City. It offers undergraduate and graduate student loans, MBA student loans, student loan refinancing and parent PLUS loan refinancing.
The company stands out from its competitors with its social promise to fund the education for a child in a developing country every time it funds a student loan or refinances a student loan in the U.S. Additionally, it offers a variety of interest-rate types and loan terms that would suit a variety of borrowers’ needs.
*Rates are current as of May 2, 2018, and include a 0.25 percent autopay discount.
^Variable rates are capped at 8.99% to 9.99% for variable rate loans, and 9.99% for hybrid-rate loans.
How CommonBond compares to other lenders
CommonBond is one of many student loan refinancing companies you can choose from, and it may be one of the top ones to consider. In a comparison of the best student loan refinancing companies for 2018, CommonBond was placed first based on its interest rate offers, fees, offers including Parent PLUS loans, repayment terms and choices and other aspects of its loan offering.
However, it may be best to consider multiple options before deciding which lender to refinance your student loans with, as each has different pros or cons. And CommonBond, as well as other student loan refinancing companies, lets you check your eligibility and approximate loan terms through a pre-approval process that won’t affect your credit.
Advantages of refinancing with CommonBond
Potentially low rates. The low interest rate on CommonBond’s APR ranges may be lower than other refinancing companies’ rates, which could help the most creditworthy applicants save as much money as possible when refinancing.
Hybrid-rate offer. It’s not uncommon for student loan refinancing companies to offer fixed-rate and variable-rate loans. However, CommonBond also has a 10-year hybrid-rate loan. With this loan, you’ll receive a fixed-interest rate for the first five years, and then a variable-rate for the remaining five years. A hybrid-rate loan could offer a lower interest rate than a 10-year fixed rate loan, and it may be a good option if you plan on paying off your loan early but don’t want to get locked into a five-year term.
Five loan terms. If you choose to take out a fixed-rate or variable-rate loan, you can choose from five different repayment terms that range from five to 20 years. The longer your term, the lower your monthly payment will be and the more you’ll pay in interest over the lifetime of your loan.
Deferment and forbearance options. If you’re having trouble making your loan payments, you may be able to temporarily stop making payments by putting them into deferment or forbearance. With either option, the missed payments won’t hurt your credit. However, interest still accrues during deferment and forbearance, and it may be capitalized (added to your loan’s principal) once you start making payments.
CommonBond matches your grace period with up to six months of deferment if you just graduated. You may also be able to defer payments for up to 32 months over the lifetime of the loan if you decide to return to school.
If you’re having trouble making payments due to financial hardship, perhaps because you lost your job, you can apply for forbearance. CommonBond lets you apply for forbearance in three-month increments, and you may be eligible for up to 12 consecutive months of forbearance. In total, your loan can be in forbearance for 24 months.
A social promise. CommonBond promises to give back to others in need, which may appeal to some borrowers. For every loan CommonBond funds, it also works with Pencils of Promise to fund the education of a child in need.
Community events. CommonBond borrowers can attend sponsored events, such as dinners and discussions with entrepreneurs.
An option to release your co-signer. Having a co-signer can help lower your interest rate when you refinance, and may even be a requirement for getting approved depending on your creditworthiness. Once you make 36 consecutive full interest and principal payments, you can apply to release your co-signer. If you pass a credit check, you may take on full responsibility for the debt and continue paying the loan with the same terms. Some other student loan refinancing companies don’t let you apply with a co-signer, or if they do, don’t offer any option to release the co-signer from his or her obligation.
Drawbacks of refinancing with CommonBond
Limited availability. Some student loan refinancing companies are able to offer refinancing in every state. However, CommonBond isn’t available to residents of six states: Idaho, Lousiana, Mississippi, Nevada, South Dakota and Vermont
Must earn at least a bachelor’s degree. You must graduate from an eligible school with at least a bachelor’s degree to qualify for refinancing with CommonBond. Other companies may let you refinance if you earn an associate’s degree or if you leave school before you complete your degree.
Only one interest rate discount opportunity. Student loan refinancing companies may offer up to a 0.50% interest rate reduction if you refinance while you or your co-signer have an eligible account with the lender, or if you make automatic payments from an account with the lender. CommonBond offers a 0.25% interest rate reduction if you sign up for autopay, but doesn’t offer any additional discounts.
No death or permanent disability discharge for co-signers. If you refinance your loans with a co-signer, and the primary borrower dies or becomes permanently disabled, the co-signer will still be responsible for the debt. By contrast, some other student loan refinance companies forgive the debt if the primary borrower dies or becomes permanently disabled. If you don’t have a co-signer, the debt will be forgiven rather than pass on to your estate.
What it takes to qualify:
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Credit Score |
660+ |
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Income/Employment |
No minimum income requirement. However, you will need proof of employment or a letter of acceptance from a future employer. |
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Loan types |
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Education requirements |
A bachelor’s degree or higher from an eligible school or program. |
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State availability |
Not available to residents of ID, LA, MS, NV, SD or VT |
Who is CommonBond best for?
Because you can apply for pre-approval with a soft credit check, which doesn’t hurt your credit, there’s no harm in checking your rate with CommonBond if you’re considering refinancing your student loans. However, CommonBond’s offering could be best suited for several types of borrowers.
If you have an excellent credit score and low debt-to-income ratio, or are reasonably creditworthy and have an especially creditworthy co-signer, you may be able to get a lower interest rate with CommonBond than a competing lender.
CommonBond’s hybrid-rate option could also be a good choice if you think you could afford to pay off your loan in five years but aren’t completely certain. While you take on a little more risk than you would with a 10-year fixed-rate loan, your interest rate and required monthly payments will be lower than a 10-year fixed-rate loan from CommonBond.
Taking a closer look at the online platform
CommonBond is an online-only lender, and its website is fairly easy to navigate and understand. At the top, you can find links to the CommonBond refinancing and loan offers, as well as a link to the FAQ page. The frequently-asked questions section is where you can find a lot of information about refinancing with CommonBond, including some potentially fine-print items like how much you can refinance, some of the potential fees, eligibility requirements and descriptions of loan terms.
There’s also a search bar at the top of the FAQ section. However, be aware that when you use the search bar, the results could appear from any of the loan products (refinance student loans, refinance Parent PLUS loans, MBA student loans or undergraduate and graduate student loans). If you’re looking for information specifically about refinancing, you may want to scroll down to the appropriate section and look for the answer yourself.
The online application is also straightforward and easy to complete. You’re unlikely to feel overwhelmed as each section only asks you for a few pieces of information, much of which you may know off the top of your head (such as your address or job). There are also clear indications of when the information you submit won’t have an effect on your credit, and when it could hurt your credit.
The fine print
As with many financial contracts, you may want to read the fine print before agreeing to take out a loan. Some of the potential fine-print terms can be found in the FAQ pages. But you may have to look through other parts of the site or review your loan documents to find a few potentially important details.
For example, the late charge and returned check charges are nominal, but we didn’t see them before reviewing the loan disclosure form during the application process.
Potentially much more important details about the loan’s deferment and forbearance options are most clearly spelled out in a blog post from July 2016. This left us questioning whether the information is still accurate (an official representative said it is). The representative also confirmed that your co-signer will still need to repay the loan if you die or become permanently disabled — we couldn’t find that anywhere on the website, but it may appear in the final loan document you’d need to sign.
If you’re having trouble finding the answers to questions, you can reach out to the New York-based Care Team (i.e., customer service) by email or phone. We called a few times and were quickly connected to someone who could answer our questions.
What to expect during the application process
To better understand the process, SimpleTuition created an account and started a student loan refinancing application. The registration asks for your legal name, email address, a password and to agree to a privacy policy. You’ll then need to submit additional information, read over disclosures and agree to a soft credit check before you can see your estimated loan terms.
Submit additional personal information
Once you begin the application, you’ll be asked to share your:
- Phone number
- Date of birth
- Current U.S. address
- Citizenship status
The second step asks about your education:
- The highest degree you received
- Your major, if applicable
- The school’s name
- The month and year when you graduated
- The estimated amount you want to refinance
The third steps involves details about where you live:
- When you moved to your current home
- Whether you own the home, rent or live with your parents.
- Your monthly mortgage or rental payments if applicable.
The fourth step is about your employment:
- You’ll indicate your employment status: employed, retired, self-employed or unemployed/student/stay-at-home parent.
- If you’re employed, you’ll be asked about the industry you work in, your job title, the employer, when you started working there and you’re estimated pre-tax income.
- If you’re retired, you’ll be asked about what industry you worked in and your estimated pre-tax income.
- If you’re self-employed, you’ll be asked about what industry you work in and your estimated pretax income.
- If you’re unemployed/student/stay-at-home parent, there won’t be any additional questions.
Agree to the federal disclosure and a soft credit inquiry
The next page is a federal disclosure that you should read over and understand if you have federal student loans. You can proceed after agreeing that you read, understood and accepted the conditions in the disclosure.
Then you’ll have to give CommonBond the last four digits of your Social Security number and permission to pull your TransUnion credit report to review your credit and give you estimated loan rates. Since this is a soft inquiry, it won’t hurt your credit score.
If you don’t qualify for refinancing on your own, you’ll be prompted to add a co-signer at this point.
Choose a loan
If you’re preapproved for a loan, you can now select the term you’d like to receive. You can sort the options by the length of the term, estimated APR or estimated monthly payments. You may also be able to change your loan option later.
Agree to a hard credit inquiry
Once you click next, you’ll be asked for your complete Social Security number and to agree to a hard credit pull.
We stopped our application at this point, as a hard inquiry could hurt your credit score. However, if you’re shopping for student loans, you can apply with multiple lenders within a 14-day period, and all the hard inquiries may count as one for scoring purposes. Additionally, inquiries from the previous 30 days may not affect your score.
Complete the loan application and verify your information
If you decide to continue with the loan application, you’ll receive actual loan offers (not estimated rates) after you agree to the hard credit inquiry.
To complete the loan application, you may need to upload supporting documents:
- Two recent pay stubs, two recent years’ tax returns or a letter of acceptance from a future employer.
- Recent loan statements for each loan that you’re planning to refinance.
- A recent bank statement or utility bill to verify your residence.
You can then review and e-sign the loan documents, and if approved CommonBond, will pay off your student loans by sending payments directly to your loan servicers. The entire process may take a few business days, but you should continue making student loan payments as you usually do until you can verify that CommonBond has repaid your loans. Otherwise, you may accidentally miss a payment. Your first payment to CommonBond will be due approximately 30 to 60 days after your loan is disbursed.
How to compare student loan refinancing offers
While you may want to get preapproved with CommonBond and refinance your student loans with the company, it could be a good idea to compare your options. A different lender could wind up offering you a lower interest rate, or have discounts and benefits that you won’t receive with CommonBond.
You can read about some of the best student loan refinancing companies on SimpleTuition. You may want to compare interest rate ranges, fees, eligibility requirements, discount opportunities, repayment terms and plans, forbearance and deferment options, death or disability discharge and any other loan terms or benefits that could apply to your individual situation.
Like CommonBond, some other student loan refinancing companies offer a pre-approval with a soft credit check, which can help you get an estimate for your loan terms and whether you’ll need a co-signer. However, don’t automatically rule out the companies that don’t offer a pre-approval. After comparison shopping for lenders, you can apply for refinancing with multiple companies without increasing the impact on your credit. Then, you make your final decision based on the firm offers.