Two major companies—Wells Fargo and Amazon—have been working together to help students have better access to student loans. This partnership has now come to an end, though. Just a few weeks ago, Wells Fargo was hyping this new program as a “tremendous opportunity” to help students better secure financing for educational opportunities. The program itself was only alive for six weeks after it was announced, but has come to an end thanks to reasons that have not yet been made public.
The program was supposed to allow member of Amazon’s Prime Student program to save an extra 0.5 percent on interest rates if they applied for loans through Wells Fargo through the Prime Student program. This was marked as Amazon’s first attempt to move into the student loan business, and it was a big measure for Wells Fargo, who has been trying to expand the amount of student loan business that they do. Wells Fargo is the third largest bank in the United States, but it is severely lacking in the very lucrative student loan business when compared to its competitors. There was a lot of opportunity here for both companies, but for now, the joint venture has come to an end.
The impact that this will have on either of the companies is likely to be minimal at most. Amazon will most likely not be impacted at all, and Wells Fargo will be hurt only a tiny amount. For short term traders, the dip that this is likely to create is going to be very slight, and if anything, will create an opportunity for a bounce in price after the initial drops are gone. Because news like this is likely to have a bigger psychological impact than a realistic one, this will give traders a chance to take better advantage of call binary options and artificially lowered prices if you are trading in the traditional stock market. You will obviously want to look at other technical and fundamental analysis measure besides this one bit of news, but news can be a good way to gauge short term reactive movement in an asset. When it is news that impacts more than one major asset, like what we see here, the news is all the more powerful for influencing price fluctuations. Just keep in mind that psychological changes in an asset’s price will often correct shortly after the initial change occurs. The real loss that both companies face here is more a loss of opportunity for growth.
The student loan industry has come under a ton of fire in the past couple years. In the aftermath of the 2008-2009 financial crisis, student loans have received a lot of scrutiny because of similarities in the underwriting process that were seen in the housing market before the crisis exploded. For example, it is almost impossible to get denied for a student loan right now, even though the student might have bad credit or a history of delinquency in paying off past debts. This is especially applicable to older students, but much of the marketing that is done for younger students when it comes to private loans is seen as predatory, and Wells Fargo has been on the receiving end of some of this. In early reports following the announcement that this partnership had been ended, many individuals were applauding Amazon for breaking off this relationship. Again, no official reason for this has yet been given as of the time of writing this, but Amazon seems to be impacted far less harshly than Wells Fargo is, showing just how important this was for the bank.