CommonBond vs Sofi: Which is Better?

In this guide, we compare two of the biggest student loan refinancing companies so you know which is better for you.

Are you interested in student loan refinancing? If you went to law school, you’re definitely not the only one. Many law students require hefty student loans to take on that three-year tuition. Once graduated, the responsibility to pay those large loans back comes at the forefront of a new lawyer’s financial needs.

Luckily, there are some great options out there when it comes to student loan refinancing. Two great refinancing companies include CommonBond and SoFi.

So which of these companies takes the lead when it comes to student loan refinancing? In this guide, we’ll be looking at everything you need to know about SoFi vs CommonBond. From their benefits to their cons to who comes out on top, we’ll explore what makes each of these student loan refinancing companies stand out on their own.

Let’s start by breaking down what Commonbond is.

What is CommonBond?

CommonBond is a student loan refinancing company that focuses on providing relief to borrowers with really high debt burdens. Specifically, CommonBond would be considered a two-sided lending platform that specializes in student loans. A two-sided marketplace involves the borrower on one side and the investor on the other side. Those who borrow through CommonBond can refinance their student loans with a much lower interest rate than what the federal government and banks typically offer. This can save the borrower a substantial amount of money– on average, borrowers that use CommonBond cut about $14,000 out of their loans.

CommonBond is quite unique when it comes to the technology it uses. CommonBond’s use of automation can speed up the process of approving student loans and offers a substantially better customer service opportunity than most refinancing platforms for this very reason. The company’s marketing is quite inviting as well, and they refer to their customers as family. In addition to student loan financing, CommonBond is also known for providing networking options, panels, events, dinners, career and job support, and more.

Though, CommonBond has its downfalls. You’ll need to have a 660 or better credit score to qualify, which can be difficult to achieve.

David Klein, the CEO and founder of CommonBond, spoke with Murray Newlands for Forbes Magazine about how CommonBond uses processes for “old” and “new” finance to deliver the best possible service.

“What we’ve noticed is that the folks in old finance are really good at the financial back end,” said Klein in the interview, “and we’re really good at the financial front end. The financial back end refers to access to big capital, at scale, and at low cost. When I say “financial front end,” I’m referring to innovative product at a more appropriate price, technology that simplifies and speeds up processes, and excellent customer service. So we do believe there’s an opportunity to link the financial front end of emerging finance to the financial back end of traditional finance. Really take the best of both worlds and make finance better for the end consumer.”

What are the Benefits of CommonBond?

There are quite a few benefits to using CommonBond to refinance your student loans. To start, CommonBond has a pretty attractive forbearance policy. If you have a bachelor’s degree and want some serious flexibility when it comes to repayment, CommonBond is an excellent choice.

That forbearance policy is over twenty-four months. That is substantially longer than other lenders and perfect for law school graduates that are struggling to find employment. Borrowers can easily see if they qualify for a refinanced loan through CommonBond, as well as what rate they can get, without a hard credit check.

You can also refinance parent PLUS loans through CommonBond, which many refinance companies don’t even do.

What is SoFi?

SoFi, like CommonBond, is a student loan refinancing company that focuses on providing relief to borrowers with really high debt burdens. SoFI (also known as SocialFinance) came out of the need for student loan refinancing after the Great Recession. The California-based company provides student debt refinancing options in addition to unsecured personal loans, home mortgages, wealth management tools, and deposit accounts. The company has a hefty referral rate among its clients at a whopping 98%.

SoFi as a company has refinanced around $18 billion in student loans and boasts around 250,000 clients. That’s impressive, but SoFI does have some serious downsides. You won’t be able to enjoy student loan refinancing through this company if your credit score is below 650. You must be a graduate of an eligible university or graduate program in order to apply as well. In addition to these requirements, borrowers need to be employed or starting a job within ninety days of applying with an approved monthly flow of cash and excellent financial history. You technically will not need a minimum income in order to apply, but when you look at the average income of their customers ($100,000) it’s clear that SoFI is ideal for gainfully employed lawyers and not law students entering the industry.

Still, SoFi is still a great company to consider for student loan refinancing depending on where you are in your financial journey. Their loans are managed by MOHELA (Missouri Higher Education Loan Authority), which is one of the biggest holders of student loans in America. Because of this, you’ll get a quick approval-to-payment turnaround and excellent customer service.

What are the benefits of SoFi?

There are a number of benefits that are unique to SoFI. SoFi is an excellent student loan refinancing lender that also provides private student loans to undergraduates. Their unique refinancing loan is better for borrowers who prefer to have additional benefits with their student loan refinancing plan. SoFi’s refinanced loans typically have very flexible repayment options and virtually no fees.

With SoFi, you can refinance a parent PLUS loan in your name, just like CommonBond. You can also see if you qualify for a refinanced loan without a hard credit check. There are also a number of great perks available for SoFi customers, including job search aid and career planning and support. 

CommonBon vs SoFi: How are they different?

Before we dive into the differences between these two customers, let’s look at some similarities. Both companies provide student loan refinancing options and both will refinance up to $500,000 in debt, though SoFi technically does not have a maximum amount. Both companies provide very competitive interest rates and allow their customers to choose between fixed or variable rates on their refinanced student loans. Just as well, both CommonBond and SoFi allow cosigners, do not have origination fees, and provide instant pre-qualification for quotes.

The differences between these companies, though, are important. 

Here are the basics of what CommonBond offers:

  • Loan range: $5,000 to $500,000
  • APR range: 3.38% to 6.45%
  • Repayment terms: Choice between 5, 7, 10, 15, or 20 years.
  • Rates: Can be fixed, variable, or a hybrid of the two.
  • Cosigner release: Yes, once thirty-six payments have been made.
  • Eligibility must-haves: 660 credit score or better, must be a graduate, must be a U.S. citizen or a permanent resident, must meet additional requirements for finances and employment.
  • Residency requirements: CommonBond lends within all states with the exception of Mississippi, Vermont, and Nevada.
  • Additional benefits: You can enjoy forbearance in the event of financial hardship.

Here are the basics of what CommonBond offers:

  • Loan range: $5,000 or more
  • APR range: 3.5% to 6.67%
  • Repayment terms: Choice between 5, 7, 10, 15, or 20 years, possibly longer terms available.
  • Rates: Can be fixed or variable.
  • Cosigner release: Not available.
  • Eligibility must-haves: 650 credit score or better, must be a graduate, must be a U.S. citizen or have permanent residence, must meet additional requirements for finances and employment.
  • Residency requirements: SoFi lends in all fifty U.S. states.
  • Additional benefits: You can enjoy deferment if you decide to return to school, forbearance in the event of financial hardship, career coaching and services, community events, an entrepreneur workshop and program, financial coaching, and an excellent referral program.

As you can see, there are some big differences. We recommend getting a free instant quote from both lenders to really see how the preliminary offers compare when it comes to your unique financial standing. Since neither platforms do hard credit inquiries for quotes, you don’t have much to lose.

Which student loan refinancing company should I choose?

Now that we know the differences between the two platforms, which one is the best choice? There is no clear winner here, because both student loan refinancing companies are excellent choices for specific needs. Let’s take a look at which of the companies are better for different things.

Deferment and forbearance options: SoFi

Both companies offer forbearance, which is the option to postpone refinanced loan payments, in the event of financial hardship. Forbearance can be a fantastic option to have in the event of economic changes or a sudden financial burden, and using forbearance will protect your refinanced loans and credit score.

However, SoFi also offers deferment, while CommonBond does not. Deferment allows borrowers to postpone their refinanced student loan payments in the event that they decide to go back to school full-time or half-time. Just as well, you can also defer your loans through SoFi if you have a lengthy hospital stay or become disabled.

Hybrid loans: CommonBond

CommonBond offers hybrid loans, and SoFi does not. A hybrid loan essentially combined a fixed rate and a variable rate within the same loan. It will have a ten-year repayment term. For the first five years, the loan will have a fixed rate. For the last five years, it will switch to a variable rate. Hybrid loans are great for borrowers who want to pay their loans off earlier and enjoy a lower fixed rate than a traditional fixed-rate loan.

Lower rates: SoFi

SoFi’s variable rate starts at 3.5%, which is slightly less than you would get with a refinanced student loan through CommonBond. However, the nature of these companies involves a constantly changing world of rates. This percentage could change, as could CommonBond’s own rate. But if you want to save some money on interest rates, SoFi is currently the better option.

Cosigner release options: CommonBond

CommonBond comes out on top again when it comes to cosigner releases. When you add a cosigner to your refinance loan application, you can enjoy low rates. This is often necessary for borrowers who do not have great credit or employment yet. CommonBond offers a cosigner release after thirty-six on-time payments. So, if you’ve done a good job at paying off your loan for a few years, you can release your cosigner from the loan contract without penalty to your rates. SoFi does not offer this option.

Member perks and benefits: SoFi

SoFi is superior when it comes to benefits for its customers. There are a ton of resources you get when you refinance your student loans with this company. Some include career services, financial coaching, community events for networking, member discounts for additional loans you choose to take from the company, referral bonuses, and more. CommonBond simply does not offer these perks.

Social mission: CommonBond

CommonBond promises to cover the cost of a child or young person’s education in Ghana with each customer than refinances a loan with them. This is done through the nonprofit organization Pencils of Promise. The company has donated over $1 million thus far through the program.

Joshua Holt

Joshua Holt is a practicing private equity M&A lawyer and the creator of Biglaw Investor. Josh couldn’t find a place where lawyers were talking about money, so he created it himself. He is always negotiating better student loan refinancing bonuses for readers of the site or finding honest companies that provide student loan advice for a fair price.

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