Less than ten days after personal lender Earnest announced it secured $17 million in Series A funding that will allow it to jump into the student loan refinancing game, and just two days after student loan refinancing startup SoFi said it received $200 million in Series D funding, the Manhattan-based CommonBond announced that it earned a $150 million investment from student loan servicing company Nelnet, funds that it will use to increase its footprint in the student loan refi space.
Which has refinanced more than $100 million worth of graduate student loans from some of the most creditworthy borrowers on the market, says Nelnet’s investment will help it accomplish two separate goals.
CommonBond CEO David Klein calls it a “Forward flow” program wherein investors – starting with Nelnet – can buy loans directly on CommonBond’s platform.
“The loan purchasers will be signing up for any and all loans that are originated on our platform. Each provider would receive a randomized set of loans so each of the purchasers have a representative sample.”
While Klein and his team have been quick to tout their status as the only millennial-led marketplace lender addressing student loans – something they say should appeal to the bank-weary segment of consumers in their twenties and early thirties – Klein said recently that partnering with a more traditional name in student lending has its own benefits.
In January, the small-business-focused Funding Circle announced a partnership with RBS wherein businesses that do not qualify for a loan from the bank will be referred to Funding Circle.
CommonBond told FORBES in December that it expects to have originated$500 million in refinance loans by the end of 2015; Nelnet’s investment not only puts it on track to meet that goal but also on track to reach $1 billion inoriginations in less than two years.