Student Lender CommonBond Enters Partnership with Nelnet

The online marketplace lender CommonBond has announced that Nelnet, an education planning and financing company, has agreed to finance at least $150 million of CommonBond's annual loan volume.

When it was initially founded, CommonBond matched graduate students seeking to finance or restructure their student debt with alumni of the same university willing to finance it on a peer-to-peer loan basis. It has expanded to general peer-to-peer and institutional investment.

Institutional investment now supplies "a supermajority" of CommonBond's capital, according to co-founder and chief executive officer David Klein. CommonBond has funded over $100 million in loans since its national launch in 2013.

"Banks have retrenched and consumers have opened themselves up to alternative forms of lending," Klein said, explaining the company's relatively rapid growth. Klein claims that the average CommonBond borrower saves $10,000 through refinancing with his company, as compared to a traditional student loan. The online lending firm offers variable loan rates starting at 1.92% and fixed rate loans at 3.89%. The current Federal Direct PLUS loan rate is 7.68%, while Federal Stafford loans for graduate students have a fixed 6.21% interest rate. Klein said that the company has yet to have a 30-day delinquency or a default.

CommonBond grew out of Wharton Business School, which all three of its co-founders attended, so naturally CommonBond began lending only to MBA students, though the company says it has expanded its platform to healthcare, finance, law, and engineering programs with over 700 graduate degree programs now eligible for CommonBond loans.

Nelnet's investment in CommonBond represents another in a recent series of marketplace lending partnerships. Earlier this week the marketplace lending leader Lending Club announced a small-business loan partnership with the Chinese online retailer Alibaba on the heels of its captive finance partnership with Google, while BlackRock invested $330 million in Prosper loans.

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