Wells Fargo, Amazon team up for student loans
Wells Fargo is offering Amazon.com customers discounted interest rates on private student loans, creating a partnership with the online retail giant at a time when private lenders are fighting for market share.
“We are focused on innovation and meeting our customers where they are — and increasingly that is in the digital space,” Wells Fargo’s head of education financial services, John Rasmussen, said in a statement. “This is a tremendous op- portunity to bring together two great brands.”
Amazon Prime Student subscribers who apply for any of the bank’s education loan products are eligible to have their interest rate lowered by half a percentage point. Wells will take off an additional quarter of a percentage point for borrowers who enroll in an automatic monthly loan repayment plan. Interest rates on Wells undergraduate loans range from 5.94 percent to nearly 11 percent on a fixed-rate loan and 3.39 percent to 9.03 percent on a variable-rate loan. Students who enlist a parent or grandparent on the loan can get lower rates because co-signers are obligated to repay the debt if the borrower does not.
Let’s say a student borrows $10,000 at a 6.5 percent fixed rate, with a standard 10-year repayment term. With the Prime discount, she could save $303 over the lifetime of the loan. Throw in the automatic payment discount, and she could save $453 over 10 years. Amazon charges $49 a year for its student subscription service, but company officials say members are under no obligation to remain subscribers throughout their time in school or over the lifetime of the loan to receive the discount. (Amazon chief executive Jeffrey Bezos also owns The Washington Post.) Amazon’s Prime subscription for college students provides unlimited free two-day shipping on more than 30 million items.
“Of course, Amazon is probably hoping that students will continue with Amazon Prime after they graduate, and Wells Fargo is probably hoping this will increase their loan volume,” said Mark Kantrowitz, publisher of Cappex.com, a college and scholarship search site.