Kaitlin Mulhere is an editor at Money.com, where she focuses on student debt. Her work guides readers from taking out their first student loan to navigating different repayment options.
Pedestrians pass a Wells Fargo bank branch in lower Manhattan on April 15, 2016 in New York City. - Spencer Platt—Getty Images
Pedestrians pass a Wells Fargo bank branch in lower Manhattan on April 15, 2016 in New York City.Spencer Platt—Getty Images
College students who are Amazon.com customers may be eligible for a reduced interest rate on private student loans, thanks to a partnership with Wells Fargo announced today.
The bank will give a 0.50% interest rate discount on new loans to borrowers who have Amazon Prime Student memberships. The discount also applies to borrowers looking to refinance their loans, so long as they're still Amazon Prime Student members.
Wells Fargo and Amazon have been working together for about a year, says John Rasmussen, head of Wells Fargo’s Personal Lending Group. And the two companies are hoping this exclusive partnership helps both meet their goals: Amazon wants to increase its college-aged Prime subscribers, which it hopes will grow into loyal adult subscribers. Wells Fargo wants to raise awareness about its resources for students.
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Wells Fargo, too, is likely angling for more customers. More than 90% of student loans today are issued through the federal government, which means private lenders such as Wells Fargo, Sallie Mae, and Discover, are competing for a limited slice of the pie.
College students can access Amazon Prime for free for six months. After that, the student subscription costs $49 a year and buys free two-day shipping and access to hundreds of streaming movies and TV shows. To get the discount, you're only required to have a Prime account when you take out the loan, and the discount can be stacked on top of other promotions, such as a 0.25% percent reduction for setting up automatic payments.
Wells Fargo’s annual percentage rates range from 5.94% to 10.93% for fixed-rate loans and 3.39% to 9.03% for variable-rate ones.
Saint John’s University is a Catholic school for men that partners with a nearby women’s school, College of Saint Benedict, to share academic programs and campuses resources. Nearly 80% of students at Saint John’s graduate within six years, 12% higher than similar schools. FULL PROFILE Courtesy of St. John's UniversityRecently admitted CalTech students scored about 1600 on average on their SATs—higher than at MIT or Stanford. Professors are notoriously hard graders. The school boasts 34 Nobel laureates among alumni and faculty. Recent grads tend to get high-paying jobs. FULL PROFILE Courtesy of California Institute of TechnologyPomona is among the handful of schools vowing to meet student’s full demonstrated need with aid, so more than 70% of grads have no student debt. With 1,600 undergraduates, Pomona features close student-faculty relationships. FULL PROFILE Courtesy of Ponoma CollegeIllinois’s flagship university is among the top 15 public schools on the National Science Foundation’s list of high research spenders, and its strongest programs include accounting, engineering, and physics. Students also have access to the country’s second largest university library system. (Only Harvard’s is larger.) FULL PROFILE Courtesy University of IllinoisClemson was founded as an agricultural college, and while agricultural science is still a specialty, more general programs such as business are more popular today. Most every one at this rural campus is united by an enormous amount of school pride, especially around the football team. FULL PROFILE Courtesy of Clemson UniversityUCLA produces a lot of stars: professors like Internet pioneer Leonard Kleinrock, grads in show business like Ben Stiller, and others in pro sports like Kareem Abdul Jabbar. The school also supports ordinary students as well, with more than one third from low-income families. FULL PROFILE Courtesy of UCLALike most large public schools, the University of Maryland has some all-star professors. The faculty roster boasts three Nobel laureates, two Pulitzer Prize winners and, thanks to the campus’s proximity to Washington, D.C., leaders in major positions at federal agencies like NASA and the National Institutes of Health. FULL PROFILE Courtesy of University of MarylandWhile Virginia Tech is known especially for engineering, its business, social sciences, and agriculture programs are also strong. The campus Math Emporium houses hundreds of computers programmed with lessons that have boosted students’ math prowess. FULL PROFILE Courtesy of Virginia PolytechnicUC–Davis has made a reputation as an affordable school that produces results. About 43% of students are low-income, but its six-year graduation rate is a high 83%. 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Like other colleges in the University of California system, the San Diego campus stands out for its comparative affordability for state residents. FULL PROFILE Courtesy of University of CalifoTexas A&M has one of the largest undergraduate student bodies in the country, with more the 40,000 students who graduate into an especially proud, loyal group of alumni. The college is well known for its business, agriculture, and engineering programs, as well as a recreation, park, and tourism management program. FULL PROFILE Courtesy of Texas A&MLike its fellow high-ranking Ivy League peers, Princeton and Harvard, Yale is highly selective. But for students who are admitted, the college promises a very generous financial aid package and courses taught by some of the world’s most extraordinary academics. FULL PROFILE Courtesy of Yale UniversityMIT is one of the best known and most respected science colleges in the world. It’s competitive selection process and grueling course load produces results, though—recent graduates boast one of the highest average salaries in Money’s rankings, according to PayScale data. FULL PROFILE Courtesy of MITStanford isn’t one of the eight members of the elite Ivy League, but it would fit right in. It’s the hardest school in the country to get into and has generous financial aid policies like Princeton and Harvard. But here’s a key difference: Recent graduates report average annual salaries that are $8,000 higher than those of Ivy League grads. FULL PROFILE Getty ImagesUVA boasts the highest graduation rate of any public university in the country, at 93%. The university’s academic strengths are wide-ranging, and the campus is the only U.S. college to be designated a UNESCO World Heritage Site, thanks its connection to founder Thomas Jefferson. 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FULL PROFILE Getty ImagesBYU-Provo is the main campus of a private college system specializing in educating members of the Church of Latter Day Saints. Non-Mormons can attend, but are charged more tuition and must obey the school’s strict code of conduct. The university has a high graduation rate at an affordable price for a private education. FULL PROFILE Courtesy of Brigham Young UniversityThe typical Rice student majors in engineering, economics, or biology, and the university is also well known in the field of political science. Graduates of the selective private school fare well in the workforce: Recent grads out-earn their peers from similar schools by 16%, according to salary data from Payscale.com. FULL PROFILE Courtesy of Rice UniversityHarvard may be the most recognizable college in the world, and it’s practically synonymous with the prestigious Ivy League. Like many of its peers, Harvard excels in Money’s rankings not only because of the outstanding education it provides but also thanks to its generous financial aid program. FULL PROFILE Getty ImagesThe University of Michigan accepts less than a third of the nearly 50,000 students who apply, and is nearly as popular with out-of-staters as with Michiganders. State residents who get in enjoy an especially good deal: Michigan is one of 11 colleges in Money’s top 50 where the average in-state cost of a degree is less than $100,000. FULL PROFILE Dave Lauridsen for MoneyPrinceton University's generous financial aid makes it, according to Money’s analysis, the most affordable member of the Ivy League. The school gives out such large grants to the six in 10 families who qualify (families earning less than $250,000 generally get some aid) that more than 83% of students graduate without any debt. FULL PROFILE Courtesy of Princeton University
For a first-year student who takes out a $10,000 loan at a 6% interest rate this year and repays it over a 15-year period after graduating, the savings from the Amazon Prime discount would be about $432, after subtracting the subscription fee. Of course, most private student loans require co-signers, and only borrowers with the most credit-worthy co-signers will get a rate as low as 6%.
So should you borrow take them up on the offer?
Maybe.
Students should first take out the maximum in federal student loans—currently $31,000—before borrowing from any other source. That's because interest rates on federal student loans are fixed for the life of the loan, and at 3.76% this year, they’re far lower than fixed-rate private loans. There are also no income or credit requirements on federal student loans, and they offer the best consumer protections and repayment options.
But if you’re already planning to take out a private loan to fill a gap between what you're paying for college and what federal loans will cover, Wells Fargo’s discount might be an attractive offer. That said, you shouldn’t borrow from any private lender before comparing multiple offers, and you should compare more than the interest rates— including the available repayment terms, origination fees, and protections such as death and disability clauses. For more advice on borrowing for college, read our Smart Ways to Borrow checklist.
