DENVER BUSINESS JOURNAL - Amazon.com and Wells Fargo have ended what was considered by many to be an unusual partnership to offer private student loans.
The companies cast the partnership in July as a way for Wells Fargo (NYSE: WFC) to reach Amazon’s (NASDAQ: AMZN) loyal Prime Student members. Amazon, in turn, ostensibly would benefit from being able to offer yet another deal to those members.
But now, the deal is done. Both companies confirmed its conclusion, but neither company has explained why they’re moving on. Bloomberg pointed to criticisms the companies faced after the initial announcement that the private loans they were offering weren’t as flexible, safe or affordable as government loans. Already, the report said, both Wells and Amazon have removed the program from their websites and are redirecting visitors elsewhere on their sites.
In July, Inside Higher Ed quoted one analyst questioning Amazon’s choice to associate with private student loans, given that such lending often carries a reputational cost and Amazon’s business model is particularly dependent on its own brand reputation. Moreover, the report said, private loans only make up 7.5 percent of the student loan market, and there’s little reason to take out private loans without first reaching federal loan limits.
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