By Anna Irrera
NEW YORK (Reuters) – Online student lender CommonBond on Monday started offering loans designed explicitly for medical and dental students, as the startup expands its suite of discipline-specific loans.
The new service aims to offer a more affordable alternative to would-be doctors and dentists than what they typically access through the U.S. government, Peter Wylie, vice-president of in-school lending at CommonBond, said in an interview.
Students will be able borrow up to the cost of attendance each year, with no co-signer required, at fixed and variable interest rates ranging between 5.56 percent and 7.06 percent, according to the company’s website. The federal government’s Direct PLUS Loan has a fixed interest rate of 7.6 percent.
New York-based CommonBond, which also offers student loan refinancing, is one of several startups looking to upend the traditional lending market by using technology to lower costs and offer services that are less expensive and easier to use. Other well-known online student lenders include SoFi and Prodigy Finance.
Founded in 2012, CommonBond has issued more than $2.5 billion in loans so far and raised $130 million in equity funding from investors including Fifth Third Bank and Neuberger Berman. Backers also include former Citigroup Inc Chief Executive Vikram Pandit.
The medical and dental loans, which have durations of 10, 15 or 20 years, come after the launch of the startup’s loans specifically for MBA students, Wylie said.
As with other online lenders, CommonBond sells the loans to institutions such as banks, but remains the first point of contact for borrowers.
Earlier this year the startup laid off around 18 percent of its staff, or 22 people, citing a plan to shift investment into new areas such as growing its in-school business.
(Reporting by Anna Irrera in New York; Editing by Matthew Lewis)