Actually opting into the PR nightmare of associating the retail giant with the much-despised, private student loan industry, Amazon entered into a tentative partnership with Wells Fargo to offer students an additional half percentage point off interest rates on private student loans.

While paying less interest over time is certainly a good thing, private student loans lack a significant number of protections that federal student loans offer. In addition, interest rates are typically higher than federal student loans, thus a half percentage point may not amount to much of anything.

While Wells Fargo is allowing students a 6-month grace period after leaving colleges to start paying back loans (similar to federal loans), a higher interest rate means more interest is piling up while the student is in school.

In addition, federal loans offer the option of loan forgiveness as well as income-based repayment over time, something that banks won’t consider with private student loans. Many private student loan lenders also alter the terms of the deal if a payment is missed, such as raising the interest rate; definitely not ideal for someone taking out $50,000+ in student loans.  (Read about more differences here.)

Presumably, Amazon and Wells Fargo have looked at data about Amazon Prime Student members and have some to conclusion that this is a good bet in terms of repayment. Unfortunately, it’s probably not great for Amazon Prime Student members.

You can read more about the partnership here. It doesn’t appear to be open to regular Amazon Prime members, only Amazon Prime Student members. Amazon offers a 6-month free trial to students, then discounts the regular purchase price of Amazon Prime by 50 percent until the student graduates.

Amazon SubPrime? The latest Prime Perk is Student Loans