Paying Your Student Loans Just Got Easier
On July 21, Amazon announced a partnership with Wells Fargo. Any Amazon Prime Student customer who applies and is approved for any of Wells Fargo’s private student loans products will get an additional 0.5 percent taken off of their interest rate. The interest rate deduction can save Amazon Prime Student customers thousands of dollars in interest payments. Amazon Prime costs $99 per year, so the interest rate savings can pay for the service. One small caveat, Amazon’s website says the discount will be applied only to new loan applications received on or after July 21, 2016. So if you already have an existing Wells Fargo student loan (like I do) you can’t get the discount.
Why This Partnership Works
Amazon is using student loans to attract a demographic with $200 billion in annual spending power to join Amazon Prime. This appears to be a win-win-win for everyone. Amazon gets more Prime customers, Wells Fargo gets more customers, and you pay less interest on your student loans. This partnership works because of Amazon’s amazing Prime service, which includes free 2-day shipping, same day delivery in some zip codes, Prime Video, Music, and not to mention a seemingly infinite amount of products at great prices. Without great service, no one would sign up. But adding an interest rate savings perk on top of an already great service is a no-brainer. By helping customers lower their student loan interest rates, Amazon guarantees they remain Prime customers. A recent survey by RBC showed that 49 percent of first-year Prime members and 68 percent of year-four subscribers spend at least $800 on Amazon each year. The longer you remain an Amazon Prime customer, the more you will spend on Amazon.
How Employers Can Benefit
Employer’s can adopt a similar debt assistance strategy to retain millennials saddled with student loans. Millennials are the largest demographic in the workforce, so retaining them is important. The longer an employee stays with the firm, the more valuable and productive they (should) become. By offering student loan repayment assistance to employees, it increases the chances they remain with the company. Just remember, employee perks by themselves will not attract or retain employees. Employer’s must first provide great service to their employees, through opportunities to grow, learn and develop.
Amazon has consistently been a leader in innovation. Amazon’s CEO Jeff Bezos, recently surpassed Warren Buffet as the world’s third richest person. Hopefully other companies will follow suit in helping to solve the student debt crisis and build employee and customer loyalty by providing student debt perks.