CommonBond: The Warby Parker of Student Loans
In the summer of 2011, David Klein had a problem, a problem shared by many MBAs at HBS: high-cost student loans. At the time, he was entering Wharton’s full-time MBA program, poised to start a company before graduating. He unwittingly happened upon the pain point, and ultimate idea, that would just nine months later cause him to drop out of school.
He and his co-founders – Michael Taormina and Jessup Shean – have since built a student lending company that focuses on lowering the cost of fixed rate student loans for MBA students in the U.S. The company has already disbursed millions of dollars and plans to launch at HBS this spring.
CommonBond is based on a model of “social lending.” Student borrowers gain access to lower cost, fixed rate loans provided by investors who earn a competitive financial return. Presently, borrowers can anticipate savings of up to $25,000 over the life of repayment.
The financial benefits of the platform are just one part of the CommonBond vision.
“The CommonBond offering is more than just a loan, or transaction. Loans today are commoditized products, but CommonBond offers a unique community of fellow borrowers and alumni lenders, along with programming to connect members and promote mentorship alongside financial support,” said Andrew Haller ’14. “This represents a valuable resource to students.”
Another RC, Preethi Krishnaswamy ’14, thinks that “CommonBond is revolutionizing the way MBA students finance their education.” She goes on to say that ”very few options currently exist for MBA students and certainly none of them provide benefits such as access to a network of students and alums in addition to an affordable loan. CommonBond is perfectly positioned to serve this need in a way that is not only scalable, but socially responsible through their one-for-one model.”
The CommonBond value proposition seems to be resonating. CommonBond is, in fact, pursuing a much larger mission to restore a sense of community and social responsibility to finance. On community, Klein and his co-founders host networking events that bring together students, alumni, and forward thinking professionals in one interconnected and supportive environment geared at enhancing professional success. On social responsibility, CommonBond has been inspired by disruptive companies before them, specifically TOMS Shoes and Warby Parker, to be the first-ever company to bring the “one-for-one” model to education.
CommonBond calls it their “Social Promise” and it’s two-fold: global and local.
- Globally, for every degree fully funded on the CommonBond platform, the company funds the education of a student in need for a full year. The company has partnered with the African School for Excellence, a self-sustaining network of independent secondary schools in South Africa, Ghana, and Kenya– to fulfill their “global Social Promise.”
- Locally, for every new city into which CommonBond brings their graduate school loan program, they are funding financial literacy programming in a local underserved community. The company has partnered with KIPP Charter Schools to make this a reality and launched their first financial literacy program at KIPP West Philadelphia to coincide with their launch at Wharton in Philadelphia.
Some have started referring to CommonBond as “the Warby Parker of student loans,” a moniker CommonBond wears humbly. “We’re huge fans of Warby Parker,” says Klein. “They have proven that business profit and social good are not mutually exclusive, but rather mutually reinforcing. What a gift they have given to companies that come after them.”
In a word, CommonBond is making the student loan process more “human.” From its community building and Social Promise to its personal treatment of borrowers, CommonBond isn’t just giving student lending a facelift, it’s giving birth to a whole new way of doing things in education finance.
With a stated goal of having as broad an impact as possible, Klein and his team are off to a great start.