WebQuest: Amazon Enters Student Loan Business (Updated on 9/2/16)
Lots of ink spilled last week on the announcement that Amazon is entering the student loan business. Use it as an opportunity for your students to get a better understanding of the student loan landscape and how to navigate the various loan types. Here are a few questions that your students can answer about this current event (see recommended articles below):
- How is Amazon getting involved in the student loan business? Will they be making student loans directly to students?
- Who is Amazon’s partner in this endeavor?
- What is the difference between private and federal student loans? Which should students consider first when taking out a student loan? Why?
- What are the experts saying about this new development? Who is in favor? Who is more cautious?
- Why do you think Amazon has decided to get into the student loan business?
- Is this a big deal? Why or why not?
Here are some articles that can help answer those questions:
- Amazon Is Now Offering Discounted Student Loans as a Prime Perk (Fortune, 560 words):Amazon is taking its nickname—the Everything Store—quite seriously. On Thursday, the e-commerce behemoth and bank Wells Fargo announced a partnership to supply some Amazon customers with student loans. The bank will give a new interest rate discount—0.5%—to borrowers who are members of Amazon Prime Student, a subscription-based service for college students that costs half the price of regular Amazon Prime.
- Wells Fargo, Amazon Team Up on Private Student Loan Deal (Chicago Tribune, 1000 words):
Wells Fargo is offering Amazon.com customers discounted interest rates on private student loans, creating a partnership with the online retail giant at a time when private lenders are fighting for market share.
- What Amazon’s Move Into Student Loans Could Mean for Borrowers (Consumer Reports, 1800 words):
The news that Amazon, in partnership with Wells Fargo, has begun offering private student loans is a provocative development for the captive American student loan market now roughly 42 million strong and $1.3 trillion in debt. Amazon Student Prime members will be able to borrow at slightly lower interest rates than what the bank currently offers.
Update: That didn’t take long! As of today (September 2nd), Amazon is no longer promoting Wells Fargo student loans. From Engadget:
It appears that partnership is already over — the promotion’s original landing page now simply redirects to Amazon’stop “college deals,” with no mention of the discount on Wells Fargo’s loan page or on Amazon Prime. Neither company gave a reason for why the promotion ended so soon, but Wells Fargo flatly told Bloomberg that the “promotion for Prime Student members has ended.”
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About the Author
Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.
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