The consumer-finance startup CommonBond is doubling down on the education-debt market, which has been a pocket of tranquility in an otherwise volatile online lending sector.
The New York company said Tuesday that it is acquiring Gradible, a website where Americans who borrowed to pay for college can get advice about their options for repaying their debt.
Also Tuesday, CommonBond announced that it has raised $30 million in new equity financing, led by Neuberger Berman Private Equity. It also obtained an additional $300 million in funding for loans from an undisclosed "leading global asset management firm."
The new fundraising comes at a time when numerous other online consumer lenders, including Lending Club,Prosper Marketplace and Avant, are struggling to find investors to help fund their loans. All have recently announced plans to cut their staffs.
Unlike those lenders, which frequently lend to consumers seeking to consolidate their credit-card debt, CommonBond focuses on refinancing student loans. Many of the company's customers have high incomes and are seen as solid bets to repay.
"There's a little bit of a flight to quality happening," said CommonBond Chief Executive David Klein, referring to institutional investors that are backing away from their relationships with other online lenders. "We have zero chargeoffs. So that's very different from many platforms."
Until recently, CommonBond seemed poised to move beyond its roots in student lending by pursuing a strategy of cross-selling a broader suite of financial products to its well-heeled customers. Indeed, the company added personal loans to its student-loan offerings earlier this year.
In an interview last week, Klein said that the company's long-term strategy has not changed. But right now, he said, CommonBond is focused on the student-loan market.
He said that in order to find more college graduates who could benefit from refinancing their existing student debt, CommonBond has started partnering with employers.
At this stage, those employers are simply making their workers aware of the opportunity to refinance with CommonBond; in some cases, the borrower may be eligible to receive cash bonuses. But CommonBond is also building technology that will enable its partners to make regular contributions to their employees' student loan payments.
Student loan contributions are a hot new trend in employee benefits, seen as a way to attract prospective employees who are shouldering lots of student debt. Other lenders including Social Finance, Inc., and Citizens Financial Group are also looking to capitalize on the wave of interest among employers.
With the acquisition of Gradible, CommonBond will now have more to offer to the human-resource departments of the employers it is courting. Gradible offers a range of advice to students, including refinancing options and information about how to qualify for the federal income-based repayment program.
CommonBond did not disclose what it paid for Gradible. The company said that it plans to use its new equity funding in part to build out its technology platforms for consumers and employers.