Amazon enters student loan business in partnership with Wells Fargo
By Dan Freed
(Reuters) - Amazon.com Inc is entering the student loan business in a partnership with Wells Fargo & Co, offering cheaper rates for loans to Amazon customers who pay for a "Prime Student" subscription.
The deal calls for Wells Fargo to shave half a percentage point from its interest rate on student loans to Amazon "Prime Student" customers, who also get benefits such as free two-day shipping and access to movies, television shows and photo storage.
"Amazon's looking for increased membership in Student Prime. That's what they want out of this deal," John Rasmussen, head of Wells Fargo's Personal Lending Group, said in an interview. "What we're looking for is exposure to our products and services and awareness. That's the extent of the relationship."
An Amazon spokeswoman sent a brief statement but did not respond to questions about its strategy or the terms of the deal.
Wells Fargo charges between 3.39 percent and 9.03 percent for a variable-rate student loan, and from 5.94 percent to 10.93 percent for a fixed-rate loan, according to rates listed on its website Thursday.
A borrower who would ordinarily qualify for a 3.39 percent rate would be able to get a 2.89 percent rate by paying for a Prime Student subscription, a bank spokesman confirmed.
Amazon agreed not to work with other student lenders in similar deals, though Wells Fargo would be able to offer similar incentives to customers of Amazon competitors, Rasmussen said.
Rasmussen said Wells Fargo does not compensate Amazon as part of the deal, nor does Amazon receive any compensation from Wells Fargo. Continued...