Wells Fargo, Amazon End Student-Loan Partnership -- Update
August 31 2016 - 7:18PM
Dow Jones News
By AnnaMaria Andriotis
That was quick. A partnership between Amazon.com and Wells Fargo
& Co.'s private student lending department has come to an end
about six weeks after it was announced.
Spokeswomen for both companies confirmed that the partnership,
which was more than a year in the making, has come to an end. The
reasons for the breakup weren't immediately known and the companies
didn't elaborate.
The partnership was a big deal for both companies. It was
supposed to give Wells Fargo a leg up in an increasingly
competitive private student loan market that has seen an influx of
fintech lenders and other firms enter in recent years.
Wells Fargo is currently the second largest private student
lender by origination volume behind SLM Corp., better known as
Sallie Mae. Citizens Financial Group has also been rapidly
expanding student loan originations in recent years.
In July, The Wall Street Journal reported that Wells Fargo would
offer interest-rate discounts to Amazon Prime Student shoppers. The
discount could be used as a way to boost Wells Fargo private
student loan applicants -- a potential boon for the bank in a
lending market that has become increasingly competitive -- and
Amazon Prime Student members.
The dissolution of the partnership was first reported by
Bloomberg on Wednesday.
In discussing the arrangement in July, John Rasmussen, head of
the personal lending group at Wells Fargo that oversees the bank's
private student lending, said it was a multiyear partnership. He
said the two companies weren't compensating each other.
In describing the partnership back in July, an Amazon
spokeswoman said it was the first time members of Prime Student
would receive a student-loan offer by a lender through its site
since the service launched in 2010. The discount was to be offered
to both students to attend college and those who wanted to
refinance existing student loans.
Wells Fargo was offering to shave a half a percentage point off
the interest rate on student loans it extended to applicants who
were members of Prime Student. Interest rate wars have been heating
up among private student lenders over the past couple of years as
they have tried to grab a bigger share of the market.
Write to AnnaMaria Andriotis at annamaria.andriotis@wsj.com
(END) Dow Jones Newswires
August 31, 2016 19:03 ET (23:03 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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