CommonBond, one of the major players in online student loans announced their Series C equity round today. The total raise, which is over $300 million includes both equity capital as well as capital to fund loans. The equity round totaled $30 million and was led by Neuberger Berman Private Equity. Total raised to date between equity and debt now totals over $1 billion. The recent round will be used to hire individuals across the organization, scale loan operations and build out the platform for both consumers and employers.
In addition, they have acquired a company called Gradible. Gradible is a personal finance platform focused on helping students manage their student loan debt. This expands their offering to employers who would like to provide a repayment program to their employees. The benefit to employees includes two aspects: assessment and contribution. Employees will have access to tools to help manage and save on their student loans. Information provided to the employee is adapted to each borrowers’ situation.
The more interesting aspect of this news is the contribution piece. As an employee benefit, companies can now contribute directly to their employees’ student loans, similar to that of a 401k matching program. As student loan debt continues to climb, this type of employee benefit will become more common for employers as they try to recruit top talent. For CommonBond it means a less risky borrower pool as companies begin contributing to the student debt of their employees.
According to the press release, a survey by Willis Towers Watson found that just 4% of companies currently offer this type of benefit, but they estimate that this could be over 26% by 2018. Nearly 100 companies are signing on to their employer partnership program. CommonBond also announced that they have crossed the $500 million mark in student loan refinancing. They now are licensed in more than 40 states across the United States.
CommonBond CEO David Klein had this to say about the recent news:
We’ve had a phenomenal stretch of growth this past year, and today’s announcement powers even more going forward. Our mission is to have as broad an impact as possible on the financial health of consumers in the U.S. And with our new investors and our new suite of employer-based products, we’re able to take our mission to the next level, now reaching all 40 million Americans with student debt, regardless of their financial profile.
This announcement is big news for CommonBond. Not only have they continued to grow at an impressive pace, but they are also well capitalized for future growth. The employee benefit space is an untapped opportunity and will help CommonBond reach new borrowers at likely a lower cost per acquisition.