WASHINGTON, July 22 (UPI) -- Amazon.com and Wells Fargo bank announced a discounted student loan interest rate to the online giant's Student Prime members who apply for a Wells Fargo private student loan.
Wells Fargo said it is coupling the 0.5 percent interest rate discount for Student Prime members with a .25 percent interest rate reduction for borrowers who enroll in automatic monthly repayment plans.
"We are focused on innovation and meeting our customers where they are -- and increasingly that is in the digital space," said John Rasmussen, Wells Fargo's head of Personal Lending Group. "This is a tremendous opportunity to bring together two great brands."
While the half percentage point interest rate discount may not seem substantial, it comes at a time when borrowers are struggling to repay student loans. Many students turn to private student loans when they have reached the annual federal undergraduate loan limit, which is $5,500 for dependent freshmen.
Some experts said the new program will do little to help the more than 43 million borrowers who owe some $1.3 trillion in outstanding student debt
Matthew Chingos, who studies student loan debt at the Brookings Institute's Urban Institute, told Fortune the announcement is "basically one lender in a market that's a very small part of the student loan pie."
"It's a marketing thing," he said. "Now Amazon can say, 'with Amazon Prime Student you get two-day shipping and a discount on your student loans.' "