Borrowing Private Student Loans with Commonbond

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By Kristen Kuchar

April 20, 2021

Choosing the right lender for your student loans is difficult. There are many options and they can all seem very similar. How can you tell the difference and choose the one that’s best for you? CommonBond offers private student loans and the opportunity to refinance existing student loans.

Before you borrow private student loans, be sure you’ve exhausted all other options, including scholarships, grants, employer tuition assistance, and other ways to reduce your college costs. If you do need to borrow, borrow federal student loans first since these loans come with better benefits, such as student loan forgiveness, income-driven repayment plans, subsidized loans, and generous deferments. 

This article will tell you everything you need to know about CommonBond’s loans and help you decide if it is the right lender for you.

CommonBond Student Loan Details

When you’re looking for private student loans, it’s in your best interest to shop around to find a good deal. Each lender is slightly different and one might be better for you than another.

You’ll want to compare interest rates, since this determines how much you will pay on the loan in addition to the principal balance. One of the top things to look for is the loan’s fee structure. Every loan charges interest, but some loans charge additional fees that drive up the cost of your loan. This can include fees like an origination fee (cost to set up or take out the loan) or an application fee.

Another thing to consider is whether the lender will let you borrow enough to cover your educational costs. The last thing you want is to apply for a loan, only to find that the lender won’t let you borrow enough to pay tuition.

These are the important things to know about CommonBond’s student loans.

  • Fixed or Variable Rate: Both fixed and variable rate loans are available.
  • AutoPay Discount: Get a 0.25% interest rate reduction if you sign up for automatic payments.
  • Fees: There are no fees for application, origination, or prepayment. CommonBond charges a late fee of 5% of the unpaid amount of the payment due or $10.00, whichever is less. Borrowers will also be charged a return check fee of $5.00, subject to state law restrictions.
  • Minimum Loan Amount: $2,000
  • Maximum Loan Amount: Borrow up to 100% of your school’s cost of attendance, as determined by the financial aid office. The lifetime borrowing limit is $500,000.
  • Loan Terms Available: Repay your loan in 5, 10, or 15 years. The smaller your loan term, the larger your monthly payment will be, but the less you will pay on interest.
  • Types of loans available: Undergraduate, graduate, MBA, medical school, dental school, refinancing

CommonBond Student Loans Eligibility Requirements

When you apply for a private student loan, there’s no guarantee that the lender will approve your application. Lenders want to see that potential borrowers have a good chance of repaying their debts on time.

Private lenders use an applicant’s credit score and income to make that decision. Since students often don’t have much (or any) income and often have a limited credit history, a cosigner is often required for approval. 

To help make the application process more clear, student lenders often list their eligibility requirements to help students know whether they have a chance of getting a loan.

These are CommonBond’s eligibility requirements.

  • Credit Score: 660 (for refinance)
  • Citizenship and Residency: US Citizens and permanent residents
  • State of residence: 49 states plus the District of Columbia (Mississippi excluded)
  • Enrollment: Half-time or more
  • Cosigner Required: Yes (for student loan)
  • Cosigner Release: Yes

A borrower is eligible to apply for cosigner release (removing the cosigner from the loan) after graduation and 24 consecutive months of full, timely payments. 

Borrowers must be the age of majority (18-21 years old, depending on the state in which you live). They must also meet the current underwriting criteria under the loan program at the time of applying for cosigner release. Any period of forbearance interrupts consecutive payments.

Remember that if you’re applying for a student loan, you’ll need your cosigner to have good credit. Your cosigner’s credit score will affect your chances of getting a loan and the interest rate that you’ll pay.

Also, keep in mind that your cosigner is taking a huge risk for you. If you stop paying your loan bills, the cosigner will be fully responsible for paying the remainder of the loan.

CommonBond Student Loan Repayment Options

With private student loans, interest begins to accrue immediately after you take out the loan. With most private student loans, you have the option to begin making payments immediately. This can help reduce the amount of interest that accrues and compounds, reducing the cost of the loan over the long-term.

CommonBond gives students four options for repaying their loans while they’re still in school. 

  • Full Deferment: Postpone student loan payments until graduation or until you leave school. Interest will accrue during the in-school deferment and will be added to the loan at the end of the deferment period.
  • Fixed monthly payment of $25: Make fixed payments of $25 each month per loan while in school. Any unpaid interest will be added to the loan at the end of the monthly payment period.
  • Interest-only payment: Make interest-only payments each month while you are in school.
  • Full monthly payment: Full monthly loan payments (principal plus interest) begin while you are in school.
Common bond student loan

Once you graduate, most student loan lenders offer a grace period before you must start making full payments. For example, if a lender offers a six-month grace period and you graduate in May, you won’t get your first loan bill until six months later, in November.

This gives you a chance to get your feet under you after graduation by finding a job and earning money before you have to start repaying the loan.

Some lenders also offer additional support for students that need more time to repay their loans, such as forbearance. If you’re having trouble paying your student loan bill, you can apply for forbearance. If approved, the lender will stop sending your bill for a set period. You don’t have to make payments during this time, giving you a chance to stabilize your finances. However, interest still accrues and will be capitalized during a forbearance.

CommonBond offers the following:

  • Grace Period: 6 months after graduating or leaving school
  • Forbearance: Available for economic hardship

Keep in mind that interest continues to accrue during both the grace period and any forbearance periods, adding to the balance of your loan.

CommonBond Student Loan Special Features

Many student lenders offer additional services or perks to people who borrow from them. These can range from nice bonuses to standout features that make a loan worth applying for.

A few of CommonBond’s special features include:

  • Money Mentoring: CommonBond loans come with a free Money Mentor – a person who can help you get more money for school, manage your budget, find internship opportunities, create a budget, answer questions about the FAFSA, map majors to career pathways, responsibly build credit, and more.
  • Payment pause: CommonBond lets you pause payments for up to 12 months over the life of your loan, giving you the chance to stabilize your finances if you’re hit with an unexpected bill or emergency. Keep in mind that interest continues to accrue during payment pauses, adding to the balance of your loan.
  • Support education in other countries: For each loan CommonBond makes the company donates to Pencils of Promise. This partnership supports education in Ghana, Laos, and Guatemala by providing training, technology, and learning materials.
  • Hybrid Rates (refinancing only): If you refinance with CommonBond you can choose a “hybrid rate” loan. This is an adjustable-rate loan. For the first five years, the loan’s rate is fixed. After five years, the rate becomes variable. This loan has a lower rate than a fixed-rate loan to start with, but after the fixed-rate period, the rate may rise.

Refinancing with CommonBond

Refinancing a student loan means you are essentially trading your current student loan for a new loan with a new interest rate and loan term. People often choose to refinance student loans to secure a lower interest rate, which can save money. Refinancing federal student loans means you’ll lose all of the benefits that go along with these loans, including potential for forgiveness, income-driven repayment plans, generous deferment periods, and potential for subsidized loans.

CommonBond also offers student loan refinancing with options very similar to its other loans. These are some of the key points for refinancing with CommonBond:

  • Eligibility: US Citizens, permanent residents, or certain visa holders (H1-B, J-1, L-1, E-2, and E-3) who graduated from an eligible school.
  • Fixed or Variable Rate: Fixed, variable, and hybrid rates available.
  • AutoPay Discount: Get a 0.25% interest rate reduction if you sign up for automatic payments.
  • Fees: There are no fees for application, origination, or prepayment. CommonBond charges a late fee of 5% of the unpaid amount of the payment due or $10.00, whichever is less. Borrowers will also be charged a return check fee of $5.00, subject to state law restrictions.
  • Minimum Loan Amount: $2,000
  • Maximum Loan Amount: Up to $500,000
  • Loan Terms Available: Repay your loan in 5, 10, or 15 years. The smaller your loan term, the larger your monthly payment will be, but the less you will pay on interest.
  • Payment terms: Payments begin 30 to 60 days after the disbursement of funds. Up to 24 months of forbearance are available.
  • Deferment: You can defer your payments if you return to school.

Frequently Asked Questions About CommonBond

These are some questions people commonly ask about CommonBond

Is CommonBond a for-profit company?

CommonBond positions itself as a socially-conscious lender, partnering with Pencils of Promise to support education in other countries.

CommonBond is a for-profit company. It describes itself as “a for-profit company with a strong social mission.”

CommonBond social promise

(Image Source)

Does refinancing student debt through CommonBond hurt your credit?

Refinancing your student loan debt can impact your credit, but it won’t necessarily hurt it.

Applying for any loan, including refinancing, will typically reduce your credit score by a few points because of the hard inquiry involved in applying for a loan. However, the impact of a hard inquiry is greatly reduced as time passes and your credit score will likely be back to normal within a few months.

If you’re refinancing, you’re likely getting better terms on your new loan that will make it easier to repay your debt. Paying down your debt can boost your credit, so refinancing may help your credit in the long run.

Does CommonBond offer federal loans?

CommonBond is a private student lender, meaning it does not offer federal loans. In general, federal loans are better than private student loans because of their lower interest rates and features like income-based repayment and loan forgiveness.

Once you’ve exhausted your borrowing limit for federal loans, turning to a private lender like CommonBond can help you pay for college.

If you have federal loans, you can refinance them through CommonBond, but doing so will mean you lose the benefits of having federal loans

Is it smart to refinance student loans with a CommonBond loan?

Depending on your situation, refinancing student loans with CommonBond may be a good idea. It’s important to understand your loans and weigh the pros and cons of refinancing before you make your decision.

This is mostly true for private student loans. If you have several private loans, refinancing them can have multiple benefits.

One benefit is that you’ll turn multiple monthly payments into a single payment. This can make it easier to manage your monthly bills because you’ll only have to send one loan payment.

Another perk is that refinancing your loans may let you lower the interest rate on some or all of the loans. If your credit has improved or rates have dropped since you first applied for student loans, refinancing can reduce your monthly payment and save you money in the long-run.

Keep in mind, that refinancing federal loans into a private loan may be a bad idea for some. You could lose the benefits of federal loans, like income-based repayment and loan forgiveness.

Is a fixed-rate or adjustable-rate loan from CommonBond better?

Fixed-rate and adjustable-rate loans have pros and cons. Neither is necessarily better than the other.

In general, fixed-rate loans have higher rates, which make them more expensive. However, they’re predictable. You can know exactly how much you’ll pay every month for the life of the loan.

Adjustable-rate loans, or variable rate loans, usually have lower rates, which makes them less expensive, at least at first. Over the life of the loan, the interest rate will change. If rates rise, your monthly payment and the total cost of the loan will both increase. However, if rates drop, your loan could get even cheaper.

In general, adjustable-rate loans that start out with a low rate can be good if you plan to repay your debt quickly. Fixed-rate loans are more predictable, making them better if you’re expecting to keep the loan for the long-term.

Conclusion

CommonBond offers private student loans for undergraduate, graduate, MBA, medical school and dental school. CommonBond also offers an opportunity to refinance existing student loans. 

Visit CommonBond’s website to learn more.

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