MBA Loans Seek to Shift the Culture of Borrowing

REPLAY VIDEO
Your next video will start in
Pause

Recommended Videos

  • Info

  • Comments

  • VIDEO TEXT

Sept. 9 (Bloomberg) -- David Klein, co-founder & CEO at Commonbond, explains his company's vision of providing lending to MBA students as an alternative to tradition student loan lending. He speaks on Bloomberg Television's "Market Makers."

Like vikram, he caught our eye.

. common bond kenexa community of borrowers with a community of investors to lower the cost of education finance for our students and graduate borrowers and provide a financial return to our investors, who can make an investment with meeting.

The participation of vikram and some of the others that we have on board, we are very fortunate.

The reason we see that is because they share our vision.

Our vision has everything to do with where finances going.

Coming out of the financial crisis and having learned a lot, we think one of the civilizing -- the silverlight is -- the silver lining is -- you are marrying investing with social purpose.

Usually when people do that things go wrong.

We think that is part of how we believe we are shifting the culture of borrowing.

Personalizing it?

We're adding a human touch.

We are changing the way capital is sourced, from personal trust networks.

We are changing the way decisions are being made.

Decisions are not being made by people.

Just walk us through how it works.

If you are a borrower, and now we're focused on nba -- on am ba -- on mba grads, you can get a lower-cost treatment can save you $15,000 over the life of the loan.

People you're raising money from may not make a spread as a bank would.

What kind of return can you generate for these people?

What would it be comparable to?

An individual alumni can make anywhere from four percent to six percent annually.

That is pretty good to the underlying risk they are taking on.

You are looking at mba students.

Law students and medical students are coming up next?

How you rate them the echo -- how do you rate them?

We have a number of filters we are looking through.

One of those filters have since -- filters happens to be other credit attributes.

We're going after certain degree programs first, where there is potential -- borrower -- at six percent what you're saying is that your pool of borrowers is going to make a return to the lender better than a junk bond.

I would be getting 6.5% but i would only be getting mac's six.

There is another side to the risk return story, and that is the risk.

If you look at the underlying risk of our portfolios versus -- sa versus a junk bond -- as say versus a junk bond.

I was a student that was back to school on the other side of -- i was 31 when i went back to school.

So did my cofounder mike.

We decided having him go through his personal pain we thought we would change it.

How you change it.

-- how do you change it?

Huddy make the changes necessary to deliver those returns gekko -- how do you make the changes necessary to deliberate those returns?

Perhaps the requirements aren't as rigid as jpmorgan or any large bank.

Are underlying criteria is still pretty rigid.

We think there is a lot of growth potential in terms of the numbers of degree programs.

There is $1 trillion of student debt out there.

Biggest headwind.

I think one of the outstanding factors is what happens in the macroeconomic environment.

We have fixed interest rate product.

We expect to grow our products over time.

There is a lot of unknown we have to deal with come along with other financial players.

This text has been automatically generated. It may not be 100% accurate.

Advertisement

BTV Channel Finder

Channel_finder_loader

ZIP is required for U.S. locations

Bloomberg Television in   change