Wells Fargo, Amazon End Student-Loan Partnership -- Update

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 [e-mail]

(END) Dow Jones Newswires

August 31, 2016 19:03 ET (23:03 GMT)

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