Millions of students rely on student loans to help finance a college degree. While nearly all borrowers are eligible for federal student loans up to certain limits, there may also be a need for private student loans to cover the full cost.
Private student loan lenders have become a staple in the student loan market in recent years, not only because of the growing need for affordable financing but also because some borrowers use these lenders to refinance federal or other private student loans. Two notable private student loan lenders in the industry are SoFi and Commonbond. Both have features and caveats which borrowers should be aware of. Here’s how the two stack up.
Available Loans and Eligibility
Both SoFi and Commonbond offer private student loan refinancing, but only CommonBond provides options for undergraduate or graduate students looking for initial funding for school. SoFi’s private student loan refinancing products include options for borrowers who have already graduated and have federal or private student loans, as well as options for parents of borrowers who have federal Parent Plus loans.
CommonBond private student loans are available to individuals just starting their college journey, either as an undergraduate, graduate, or MBA student. Like SoFi, CommonBond also offers private student loan refinancing for federal and other private student loans, as well as Parent Plus loans.
Each private student loan lender allows borrowers to check their eligibility and potential interest rate online through a simple form. With SoFi, a borrower must be a U.S. citizen or permanent resident to qualify for a refinanced student loan, and they must have graduated from a Title IV accredited university or graduate program. SoFi also requires a borrower to be either employed, have a job offer, or have adequate income from other sources before an application can be accepted. A strong track record of on-time payments must be in place, as well as healthy cash flow each month.
CommonBond’s requirements for a private student loan are similar to SoFi in that borrowers must be U.S. citizens or permanent residents. Applicants must have also graduated or are planning to attend a Title IV accredited school or graduate program, and have a strong credit history and score. Both SoFi and CommonBond allow borrowers to apply with a co-signer if that would increase the chances of having a private loan application approved.
Interest Rate Options
SoFi makes two interest rate options available to qualified borrowers: fixed and variable. The fixed interest rates offered on a private student loan refinance from SoFi currently range from 3.350 percent for a five-year loan to 7.125 percent on a 20-year loan. Variable interest rates start lower, with rates currently as low as 2.815 percent on a five-year loan and as high as 6.740 percent on a 20-year loan. Borrowers must select the type of interest rate they want at the time of application.
CommonBond private student loans come with three interest rate options, including fixed, variable, and a hybrid of the two. CommonBond currently offers fixed interest rates as low as 3.35 percent and as high as 7.12 percent, depending on the loan term selected and the credit history of the borrower. Variable interest rates with CommonBond range from 2.81 percent up to 6.74 percent based on the same criteria. CommonBond private student loans are unique in that a hybrid interest rate option is available which fixes the rate for the first five years of the loan, after which time it reverts to a variable rate for the remaining five years. Hybrid interest rates currently range from 3.77 percent to 6.22 percent. Like SoFi, the interest rate option is selected at the time an application is submitted.
Repayment Options and Terms
Both CommonBond and SoFi have a minimum of $5,000 for student loan refinancing and a maximum borrowing amount of up to the total outstanding federal and private student loan balance for each borrower. CommonBond offers repayment terms from five, seven, ten, 15, or 20 years for loans with variable or fixed interest rates. The hybrid interest rate loan has a ten-year repayment period.
SoFi offers repayment terms of five, seven, ten, 15, or 20 years for both fixed and variable interest rate loans. Neither SoFi nor CommonBond charge origination or application fees, which helps to keep the total cost of refinancing low for qualified borrowers.
SoFi offers several benefits to student loan refinance borrowers, including a member discount of 0.125 percent for simply being part of the SoFi community. There is also a 0.25 percent interest rate discount for borrowers who enroll in automatic payments. Additionally, SoFi borrowers are offered unemployment protection as a no-cost perk which temporarily pauses monthly loan payments until new employment is found. Student loan borrowers also have access to career support coaches and wealth advisors through SoFi, all at no cost.
CommonBond borrowers also have access to exclusive benefits, including the ability to postpone monthly payments should a borrower fall on hard financial times. There are several educational resources available through CommonBond’s website as well, helping borrowers understand how long-term debt affects their total financial picture. As a unique feature, CommonBond also funds one child’s education with each new loan it originates, making it a socially-focused lender.
SoFi allows borrowers to add a co-signer to an application for a private student loan refinance when the primary borrower’s credit history or income are not strong enough to qualify alone. SoFi does not give borrowers an opportunity to apply for a co-signer release at any time during the repayment term, although a borrower may refinance to remove a co-signer should their credit or income improve over time. CommonBond only allows a co-signer on a private student loan, not a refinance, but after two years of consecutive payments an application to release the co-signer may be submitted.