A rather unusual collaboration: Amazon teams up with Wells Fargo on private student loan deal

Source: Danielle Douglas-Gabriel, Washington Post, July 21, 2016

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. … 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 for four-year colleges 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. … While it’s not uncommon for banks to partner with retailers to offer credit-card customers discounts on shopping or travel, price reductions on loans is a bit unusual, but not completely surprising given the state of the private student loan market. Private lenders — banks, credit unions and other financial firms that provide education loans — hold only 7.5 percent of the $1.3 trillion student loan market, a fraction of their market share before the federal government decided in 2010 to lend directly to students, rather than work through banks to issue loans. … Private student loans have drawn criticism for having inflexible repayment terms and weaker consumer protections than federal loans. But in recent years, more banks, credit unions and other financial firms that provide education loans have been offering competitive terms.