Marketplace Lending Gains Traction in Student Debt Dilemma
Student debt tips the scales at $1.2 trillion with the burden at a record high for graduating students of 2015.
Student loan-focused marketplace lending startups like CommonBond and SoFi are quickly becoming a reputable source for qualified graduates to lean on for their refinancing products.
On September 8 The New York-based firm, CommonBond, announced a Series B round of funding taking on an additional $35 million. The venture capital firm, August Capital, led this new funding round, according to CommonBond chief executive David Klein.
Hans Morris, Nyca’s managing partner, ex-President of Visa and a director of the portfolio company Lending Club, has been added to the CommonBonds board.
A total of $400 million has been raised, according to Klien, with the help of some big name investors including Vikram Pandit a former Citigroup chief and Tom Glocer a former Thomson Reuters chief.
The firm closed its inaugural securitization of graduate student loans in June helping the company to raise $100 million in the process, as recorded my Jonathan Marino of Business Insider. The loan servicing firm NelNet has committed to buying a portion of the loans generated as a partner of this startup.
Since big name banks have withdrawn from the student loan business, including JP Morgan and Bank of America, due to federal competition and red tape limiting these banks ability to create loan growth and expand business.
CommonBond is now hard focused on graduate students, the more reliable group of borrowers, over undergrads.
According to the Edvisors.com publisher, Mark Kantrowitz, the graduating class of 2015 will receive their diplomas along with an average of more than $35,000 in student debt.