Article updated 7/12/17 to include the latest interest rate information
Two of the top names in student loan refinancing and consolidation are SoFi (aka Social Finance) and CommonBond. These two companies are both relatively new, and were created for the purpose of consolidating student loans. SoFi has been in the business slightly longer and has a larger market share.
The consolidation services offered by both companies are also very similar. Both offer fixed rate loans and variable rate loans. Both companies offer a maximum repayment length of 20 years, and interest rates start below 3% (though this ultra low rate is only for 5 year variable interest loans).
Most of these similarities are in place because both companies are targeting the same borrowers. If you have a great income and great credit score, odds are good that SoFi or CommonBond will be able to lower your interest rates dramatically. (If your income isn’t huge or your credit score is less than perfect working with a company like Lendkey may be a better alternative. They will match you with a non-profit credit union to consolidate your debt – you just won’t get the rock bottom interest rates.)
So what is the difference?
The SoFi approach is to roll out the red carpet for student loan refinancing. They have some perks similar to those that you might find with a premium credit card. Perhaps the best SoFi perk is their job placement program. Nobody plans on using this feature but like a credit card that comes with free roadside assistance – it is great to have if you find yourself in an unexpected ugly situation
SoFi also offers a sign up bonus. It isn’t nearly enough money that it should sway you in direction or the other. However, if you can get a few extra bucks in your pocket when you sign up, its a win. For a while CommonBond offered a $200 bonus for signing up, however as of the date of this article, we could find no such bonus. SoFi is presently offering $150 to new customers. It isn’t enough to make a difference if the interest rates are different, but it is a nice little reward for making the decision to refinance your student loans.
Update 6/17/2015: CommonBond now also offers $150 to new customers.
Which student loan is best?
SoFi has a couple extra perks that give it a slight edge over CommonBond. It is the reason SoFi is first in our Student Loan Consolidation Rankings, while CommonBond comes in at a very respectable 3rd.
That being said, very little separates these two companies. The best company for most will be the one that offers the lowest interest rate. Applying to both is likely the best option, especially considering that multiple applications don’t hurt your credit score as it is now considered to be “shopping around” by the major credit bureaus.