Amazon.com (AMZN) Stock Down, Prime Members Get Student Loan Discounts

Wells Fargo’s student lenders will offer a 0.5 percent interest rate discount to members of Prime Student, Amazon’s half-price version of Prime for college students.

Private student loan lenders often offer borrowers a low interest rate at the outset of the loan, but they have significantly less flexibility than federal student loans when it comes to fluctuation of interest rates, types of repayment plans and ability to work with borrowers to prevent default.

“We are focused on innovation and meeting our customers where they are – and increasingly that is in the digital space”, said John Rasmussen, head of the Wells Fargo personal lending group. If shelling out for a Prime Student account wasn’t attractive enough, Amazon seems to hope getting discounted interest rates will be enough to draw in new customers.

This is the first time Amazon has partnered with a loan provider to offer discounts to student shoppers since the Amazon Student program launched in 2010 to target student shoppers.

Private student loans are a booming industry, albeit one that has faced criticism.

Under the agreement, Prime Student members are eligible for a 0.50% discount on Wells Fargo-issued loans.

One of the largest USA banks and the second-largest private student lender by origination volume, Wells Fargo today has over 1.05 million customers, including students, parents and family, across the US, who are served by its Education Financial Services arm. But those already looking to subsidize federal money with private loans, where interest rates can depend on the borrower’s credit score, could be intrigued by a promised half-percent discount. Customers can apply for loans at over 6,000 Wells Fargo banking locations as well as online.

Kantrowitz said the government’s student loan program remains the most affordable and flexible option for families needing to borrow for college.

Other Hedge Funds, Including, Coastline Trust Co reduced its stake in WFC by selling 605 shares or 1.21% in the most recent quarter.

“This is the kind of misleading private loan marketing that was rampant before the financial crisis”, she said in a statement.

Student loan borrowers are big business.