Customers make great employees at New York City-based financial services provider CommonBond, where staff members receive $1,200 a year to help repay student loans.
David Klein wanted to become an entrepreneur so badly that he racked up $100,000 in student debt to learn how to start a business. At least he started one that could help him pay off those loans more quickly.
His staff is happy about it too. That's because Klein, the co-founder and CEO of online lending startup CommonBond, turned his MBA stint in Wharton's entrepreneurship program into a company that simplifies--and reduces the costs of--taking out educational loans. And now it helps its employees repay their student debt every month.
One of the most important attributes of our 50 Best is the financial security they provide their staff. CommonBond helps its employees when they are still fledglings. "We understand that student loans fit at the very top of mind," says Klein, a former McKinsey consultant and American Express manager who often still talks like both. "It makes perfect sense to provide the most comprehensive private loan repayment benefit."
Since December, his New York City company has offered workers $100 per month to help with their loans. Klein estimates that about a third of CommonBond's nearly 100 employees use the benefit, meaning that his company is spending roughly $36,000 per year on its employees' college debt.
That's a savvy recruiting move for a fast-growing but still small company. CommonBond is part of a crop of high-tech financial startups vying for Millennials' money, starting with one of its biggest drains: huge student debt balances, often accumulated while attending elite, and expensive, colleges and graduate programs. Venture-backed and picky about the borrowers it chooses, CommonBond refinances existing loans at lower-than-usual rates (about 5 percent versus 7 percent), claiming that it saves customers $14,500 on average. It also makes new loans for education and, in a pilot, anything for which existing customers might otherwise use a credit card. So far, says the company, it has funded and refinanced more than $500 million in credit. Revenue was $5 million in 2015, with 2016 projections of two to four times that amount.
CommonBond offers the student loan benefit in lieu of some more traditional workplace benefits, such as matching 401(k) contributions. But its startup-young employees are more concerned with the steep bills due today than the distant prospect of retirement, and they don't seem to mind the tradeoff.
Victoria Green, a bubbly 22-year-old on CommonBond's customer service team, graduated in 2015 from St. Olaf College in Minnesota with a double major in theater and race and ethnic studies--and $27,000 of debt. "That's tough for my family," she says. "I'm a first-generation college student, so the whole student debt thing is very new to us." The loan benefit is helping to smooth her transition to postcollege life in a very expensive town. "They put that $100 into your paycheck every month," she says, "and then I'm just $30 out of pocket for my loan."
She was also won over by a secondary but more longstanding benefit: CommonBond's unusual effort to adopt the buy-one give-one charitable model. The startup funds the nonprofit Pencils of Promise, which builds schools and provides scholarships in Laos, Ghana, and Guatemala. For every student loan it makes, CommonBond funds one year of education for a Ghanaian schoolchild. The program has provided $250,000 to Pencils of Promise so far, helping more than 2,000 children, according to Klein. "I am very inspired by the one-for-one model, but I wasn't sure what form it was going to take," says Klein. "For Warby Parker, the unit is a piece of eyewear. We're funding units of education."
This social mission has helped as a recruiting tool; CommonBond claims an 85 percent acceptance rate for its job offers. And Klein's employees sound even more enthusiastic about this benefit than about the help with student loans, in part because it lets them support a social mission while getting paid. "I'd worked at big companies, and I thought I was giving back through volunteering," says Nikki Singh, CommonBond's director of campus relations (she's repaying $30,000 in debt, mostly from grad school). "Finding such a strong social mission, I felt like I'd won the lotto. My work life and my volunteer life don't have to be separate anymore."
Tall and angular, with russet-tinged hair offsetting a pale pate, Klein can seem less tech founder than corporate manager. But though he was privileged enough to pursue an MBA at a fancy school and then start his own business, he has had to eat his own metaphorical dog food. "I have about half of my student loan balance left," he says. "The good news is, I was finally able to refinance with CommonBond."