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Businesses Education The Almighty Buck United States

Amazon Suddenly Stops Selling Student Loans (bloomberg.com) 81

Posted by EditorDavid from the higher-education-fees dept.
"The promotion has ended," a bank spokesperson said. After more than a year of preparation, Amazon's partnership with Wells Fargo to sell student loans barely lasted six weeks. An anonymous reader quotes Bloomberg: It's another black eye for Wells Fargo's student loan business, which just last week agreed to pay $3.6 million to the federal Consumer Financial Protection Bureau to settle claims that it misled borrowers, illegally charged certain fees, and processed payments in a way designed to maximize late fees. Wells Fargo neither admitted nor denied wrongdoing.
The article cites a consumer advocate who says both Amazon and Wells Fargo were hiding the high costs of the loans, as well as their inflexible terms for repayment, in a "cynical attempt to dupe current students." The Washington Post noted that interest rates for community colleges and for-profit institutions "can climb to nearly 14%."
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Amazon Suddenly Stops Selling Student Loans More

Amazon Suddenly Stops Selling Student Loans

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  • Editor? (Score:1)

    by Anonymous Coward

    "The article sites a consumer advocate who both Amazon and Wells Fargo were hiding the high costs of the loans"

    What? Presumably the article actually "Cites" this consumer advocate who "claims" both... perhaps?

    Does any editing actually occur here?

  • One of the presidential candidates has promised they would fix the student loan crisis upon becoming president. If Amazon has some precognition that this candidate will likely become the next president (and I believe they do) and the president-elect does what they promised (and I believe that they will), or that there's an onerous interest hike and regulation in the works (more likely than not) then there's no big money left in student loans and they pulled out.

    • Re: (Score:1)

      by Anonymous Coward

      ...the president-elect does what they promised (and I believe that they will)...

      Congress would have to pass a law. The POTUS couldn't do anything on their own. The ONLY power the POTUS has on issues like this is veto power. And they have hardly any control over the economy. I don't why folks believe the candidates when they say they can fix it.. They can't. (FDR getting us out of the Depression is a myth. Regan giving the boom in the late 80s is a myth. Clinton giving us the great economy of the 90s is a myth. BUT their respective political parties LOVE the credit.)

      President's don't

      • You're saying that presidential candidates don't tell the truth about what they'll do when in office?

    • Given the timing is it possible they were targeting Undergraduates as most of those will have their loans by now

  • The banks are criminal organizations (Score:5, Insightful)

    by fustakrakich ( 1673220 ) on Sunday September 04, 2016 @12:09PM (#52824903) Journal

    Not only do they engage in fraud, but also money laundering [theguardian.com]. To this day, they and HSBC and BoA, etc. etc. etc. remain immune and untouchable. And we continue to stand by and reelect the politicians that also benefit, totally distracted by *he who shall not be named*, not that anybody cared beforehand.

    It is probably a wise move for Amazon to keep its distance, lest they get caught up in this tornado and lose everything.

    • Re: (Score:1)

      by Anonymous Coward

      I see Occupy Wall Street (or is it Black Lives Matter now?) has come to Slashdot for a visit.

    • Not only do they engage in fraud, but also money laundering [theguardian.com]. To this day, they and HSBC and BoA, etc. etc. etc. remain immune and untouchable. And we continue to stand by and reelect the politicians that also benefit, totally distracted by *he who shall not be named*, not that anybody cared beforehand.

      It is probably a wise move for Amazon to keep its distance, lest they get caught up in this tornado and lose everything.

      Well no shit. Gays can't marry and we need the wall ASAP to solve all our problems!

    • Hey, look! Vague, hand-wavy Occupy tantrum style assertions about the 6,700+ banks that operate in the United States. Are you keeping a secret dossier on each of them, which you are for special secret reasons hiding from the thousands of law enforcement officers and entities who would like to know which laws all of The Banks are breaking, until you can sell you story? It must be exhausting keep track of all of that crime being committed by hundreds of thousands of people.

      • :-) Thank you for your input. You really are my favorite tag-along troll.

        • I know! And we can always count on you to not only post without any sort of detail or backing up of your drive-by assertions, but to make double sure that you never provide that sort of substance in any of your follow-up comments, either.

          And, are you really going to pretend that pointing out how absurd your assertion is is a case of trolling? Or are you one of those people who calls any request to back up your characterizations trolling, as an attempt to distract from the fact that you really have nothin
      • Hey look a snide remark from a contrarian. One thing about /. the spergs will always show up.

        • a snide remark from a contrarian

          You don't think that an absurd assertion about "the banks" being actual criminal operations is snide? Or are you doing along with that, while also not having any interest in backing up such a ridiculous thing to say? Nope. You just toss some lazy ad hominem at the person who points that out. Carry on, of course, if that's what makes you feel good about your world view.

          • I know it's a wasted effort on you, but what the hell [cnbc.com]... something for the viewing audience

            Too big to punish [theguardian.com]

            • So when you use words, you just don't actually MEAN the ones you use. Got it.

              • :-) Once again you wander off into la-la-land. Exactly as predicted, any and all evidence is just pearls to the swine with you. Classic evasion, just like before. I bet you didn't bother to read those links either. Must be what intrigues me so much, the challenge of breaking through dense bone to see what's inside, like taking apart a blender to see how it works. The attraction is compelling. You bring such clarity. You answer all the questions. Very entertaining, I mean, enlightening... well, both. Thank y

    • Not only do they engage in fraud, but also money laundering [theguardian.com]. To this day, they and HSBC and BoA, etc. etc. etc. remain immune and untouchable. And we continue to stand by and reelect the politicians that also benefit, totally distracted by *he who shall not be named*, not that anybody cared beforehand.

      It is probably a wise move for Amazon to keep its distance, lest they get caught up in this tornado and lose everything.

      Why they would get involved in the first place is a mystery to me...... Unless they thought that selling student loans and tying it to reduced prices for said students to purchase nearly everything through them. Or, perhaps, just showing student loans somehow increased students' confidence in Amazon so they just plain purchased things through them (quick bait tactic). Once the loans started to actually go through, they realized that the cost exceeds benefit. I don't know.

      Finding out what they got themse

      • Once the loans started to actually go through, they realized that the cost exceeds benefit.

        The cost being that they could be implicated in Wells Fargo's fraudulent practices and be made into the fall guy. Where Wells Fargo gets a small fine, Amazon could be wiped out, and rather than being forced to blow the whistle on what they discovered, they decided to just back away. But you are right, they were probably temporarily dazzled by the marketing opportunities. Maybe Amazon should open a savings and loan of

  • All student loans are sketchy (Score:4, Insightful)

    by Anonymous Coward on Sunday September 04, 2016 @12:23PM (#52824951)

    Banks are incredibly greedy, no doubt. They're always looking for new fees and new ways to prey on consumers. I nearly took out a student loan with Wells Fargo a few years ago, and I'm really glad I didn't. Federal loans are pretty sketchy, too, though. It's not the government, necessarily, that's the problem. The issue is that you get assigned to a student loan servicer. Nelnet is mine, and they're a complete disaster. I've always made my payments on time, and pay a little extra along the way, but they've claimed I've missed a payment when I didn't. Then they tried to tell me I was wrong when I claimed I didn't miss a payment. Finally, I asked which payment was late and, not being able to tell me, they admitted they were wrong. The next month they again claimed I'd missed a payment and, upon me threatening to report them to the BBB and attorney general and threatening to sue them, the problem magically got fixed. I've concluded that ALL student loans are sketchy, and I can't wait to pay mine off and never look back.

    • Banks are incredibly greedy, no doubt. They're always looking for new fees and new ways to prey on consumers. I nearly took out a student loan with Wells Fargo a few years ago, and I'm really glad I didn't. Federal loans are pretty sketchy, too, though. It's not the government, necessarily, that's the problem. The issue is that you get assigned to a student loan servicer. Nelnet is mine, and they're a complete disaster. I've always made my payments on time, and pay a little extra along the way, but they've claimed I've missed a payment when I didn't. Then they tried to tell me I was wrong when I claimed I didn't miss a payment. Finally, I asked which payment was late and, not being able to tell me, they admitted they were wrong. The next month they again claimed I'd missed a payment and, upon me threatening to report them to the BBB and attorney general and threatening to sue them, the problem magically got fixed. I've concluded that ALL student loans are sketchy, and I can't wait to pay mine off and never look back.

      I do not intend to be off-topic (and certainly hope I'm not), but I don't understand how the lucky (who have stories to tell about it) people that got BS/MS/PhD degrees managed to not pay a cent, or only a 1% fee on their loans. What did the loan "companies" have to gain from those individuals versus people with almost identical SAT/etc scores that got shafted with the generic bait and hidden-text switch regular student loan method? Is it like the way they target torrent downloaders/hosts - just do a rand

      • Re:All student loans are sketchy (Score:5, Interesting)

        by slew ( 2918 ) on Sunday September 04, 2016 @05:51PM (#52826289)

        Banks are incredibly greedy, no doubt. They're always looking for new fees and new ways to prey on consumers. I nearly took out a student loan with Wells Fargo a few years ago, and I'm really glad I didn't. Federal loans are pretty sketchy, too, though. It's not the government, necessarily, that's the problem. The issue is that you get assigned to a student loan servicer. Nelnet is mine, and they're a complete disaster. I've always made my payments on time, and pay a little extra along the way, but they've claimed I've missed a payment when I didn't. Then they tried to tell me I was wrong when I claimed I didn't miss a payment. Finally, I asked which payment was late and, not being able to tell me, they admitted they were wrong. The next month they again claimed I'd missed a payment and, upon me threatening to report them to the BBB and attorney general and threatening to sue them, the problem magically got fixed. I've concluded that ALL student loans are sketchy, and I can't wait to pay mine off and never look back.

        I do not intend to be off-topic (and certainly hope I'm not), but I don't understand how the lucky (who have stories to tell about it) people that got BS/MS/PhD degrees managed to not pay a cent, or only a 1% fee on their loans. What did the loan "companies" have to gain from those individuals versus people with almost identical SAT/etc scores that got shafted with the generic bait and hidden-text switch regular student loan method? Is it like the way they target torrent downloaders/hosts - just do a random pick of a few in a state with hard laws and go with those?

        Shrug.

        Since you don't get pick which company gets to service your loan and since loans are batched up and transferred to serviced pretty much ad-hoc, it might as well be randomly assigned from the perspective of the borrower. Don't worry, it has nothing to do with your SAT score. Loan servicers bid for contracts to service loans (e.g., keep track of payments) on behalf of the holder of the loan. Like with many things, some servicers bid low and hope to make it up in fees, some might be more reputable but of course they make less money.

        Not saying wells fargo (or other banks and loan originators), are without blame (no doubt they continue to do business with shady loan servicers as well), but it is also quite likely that the originator of the loan packaged your loan into a big pool and sold them to an investment company. That investment company is free to work with these shady loan servicers (and may even potentially be in cahoots with them) to squeeze out every penny from you to maximize the return on their investment. This happens with all types of loans (house, car, student, personal, etc) and is not restricted to student loans. In fact most originators sell your loan pretty much immediately to such investment companies, so they have more money to create new loans (that is how they make money).

        Lest you think originators reselling loans in pools is something only underhanded companies do, two of the biggest USA government chartered companies FannieMae and FreddieMac were created for exactly this purpose: to buy loan pools from loan originators, package them up as bonds and sell them as investments. This was seen as an essential function to make sure that loan originators always had enough liquidity to finance non-FHA conforming loans (loan originators could buy GNMA insurance for FHA conforming loans and securitize them in to US treasury backed GinnieMae bonds, but not non-conforming loans).

        Unfortunately, this whole idea of a secondary market for loan pools is what many believe contributed to the 2008 crash. Since investment companies were making so much money from these loan pools (buying them from originators and reselling them to investors), they wanted any loan pools they could get their hands on. Since AAA rated pools equivalent to FHA loans through FannieMae and FreddieMac were in short supply, investment companies bought lower rated

        • That was very in-depth and quite educational. I've seen plenty of stuff about other loan types; pretty much describes what you said. That means I know what you're saying, though my in-depth knowledge barely breaks the proverbial meniscus.

          What I don't understand is the difference between people who got loans in, let's say, 1998, and didn't have to pay a single cent on their own and made it all the way through to a PhD. Still owe no money. Pretty much a grant, I'd assume. Persons with the same scores comin

          • Re: All student loans are sketchy (Score:5, Interesting)

            by slew ( 2918 ) on Sunday September 04, 2016 @09:06PM (#52827065)

            Well, of course very school is different, but it has been my observation that the people working financial aid dept for colleges are more concentrating on getting people financed (either through grants/loans), than the actual terms of that financing.

            I don't blame them, I know how hard they work, and the are overworked and underappreciated, but their goal is really to get everyone matriculated to be financed (because, generally, they won't be able to attend if they aren't financed). If you want to think about it, it's like Tetris, they have lots of weird blocks of funding (grants, loans, fellowships, etc) that become available at different time to fit to the students empty coffers which appear as they matriculate and sometimes they just need to fill up a row of students because time is of the essence and they generally don't look back to see if it was optimal or not once a row of students is retired and shifted away. When it is done and the whole class is financed, they declare success and move on to their next task (raising funding for next quarter), but unfortunately it is the students that experience the indigestion that can be the result of their efforts.

            The sad part of this is that most students approach educational funding the same way. If they get financed, they win, and generally don't think about the terms. People may lament the apparent unfairness of this lottery based funding system for higher education, but it is the current reality. IMO, part the issue is the fact that students often will opt for a specific educational path regardless of the cost to them specifically blindly believing that a head-in-the-sand approach to educational financing will yield them their desired result. We have sex-ed in secondary school, why we don't have financial-ed is beyond me.

            Your lament seems to be reminiscent to a group of friends sitting around with some beers some complaining how some people got to have unprotected sex in high school and it didn't result in a pregnancy or some dreaded STD, yet others experienced life changing results with their singular lapse in judgement. Perhaps those that dodged the bullet, just got incredibly lucky with their inordinate risk.

            Quantum mechanics tells us that end results in the universe are often only statistical, not deterministic. Since we can't live in a basement, we often need to take risks which potentially have statistical results from time to time, but we know that statistically better (but not guaranteed) outcomes result from calculated risks, not hopeful risks. We can bemoan dependence on luck, but remember, funding for anything (including higher education) is a scare resource and sometime the fairest way to distribute such a resource is by drawing straws. Sometimes you have to ask yourself if a 1550 SAT really statistically better than 1600 based on 1 sampling point taken at one point in time and if it would actually be fair to distribute resources based on a potential statistical anomaly...

            • Thank you. That was one of the most informative and educational, while analytical and based on direct and scientific observations and sharing things I rarely see the ilk of. Basically, thank you for not being an asshole. Your information is as well-worded as I believe any can be. You know, without getting a gag order.

              Humor aside, thank you again for real information and helping someone keep their head on straight, knowing that the disgusting actions and reactions observed are not always based on ill will or

    • Re:All student loans are sketchy (Score:4, Interesting)

      by hazem ( 472289 ) on Sunday September 04, 2016 @06:13PM (#52826375) Journal

      I really hate the for-profit servicers as well. "Obtuse" is a polite term for them. I really miss when my loan was serviced directly by the Department of Education.

      To deal with this kind of issue (I had this with Verizon), I encode my payment amount so I can know what's paid and when. For example, let's say the actual amount due is $253.12. I'll put the month as the last dollars and the cents for the day. So making that payment on June 4th, I'd actually pay $256.04. A payment on July 3rd would be $257.03. So even if they don't post it to my account for 2 months, I know which payment it was.

      Next, use your bank/credit-union's bill pay to send payments so you have an audit-trail. NEVER let them draft from your account - it's just not worth the .25% rate break.

      Lastly, if they're servicing federal loans and still jerking you around, write to your senators and congresspeople. They have staff who are good at helping un-f*ck bureaucratic organizations.

  • The Fine ate the profits (Score:3)

    by Dracos ( 107777 ) on Sunday September 04, 2016 @12:35PM (#52824981)

    The CFPB fine probably ate enough of the projected profits to make the program not worth continuing (which means they'd have to fix the issues).

    Impressive that the stage coach is still blatantly robbing people.

  • Fortunately in the country I live, the state offers student loans with low rents (something entirely against the US ideology that the private sector has to do everything). If you can't it pay back in 15 years (minimum payback amount depends on your income) you don't have to pay back the restant. It is considered an investment in a highly educated population, which is itself good for the economy. Add to that that university here is much cheaper than in the US (college money is about 2000 euro's per year, plu

  • Interest rates on Wells undergraduate loans for four-year colleges range from 5.94 percent to nearly 11 percent on a fixed-rate loan and 3.39 percent to 9.03 percent on a variable-rate loan. Rates on the bank’s loans for community and for-profit colleges can climb to nearly 14 percent. That’s a far cry from the pricing the government offers. The government charges undergraduates 3.76 percent interest and graduate students 5.31 percent interest on new loans for the 2016-2017 academic year. Federa

    • Interest rates on Wells undergraduate loans for four-year colleges range from 5.94 percent to nearly 11 percent on a fixed-rate loan and 3.39 percent to 9.03 percent on a variable-rate loan. Rates on the bank’s loans for community and for-profit colleges can climb to nearly 14 percent. That’s a far cry from the pricing the government offers. The government charges undergraduates 3.76 percent interest and graduate students 5.31 percent interest on new loans for the 2016-2017 academic year. Federal loans are only offered at fixed rates, and students don’t need co-signers with stellar credit to qualify for the lowest rate.

      Instead of getting all upset, people should then simply take the federal loan instead of the Wells loans. If they can't get the federal loans for some reason, then it seems unreasonable to demand that private banks match federal rates.

      Pauline Abernathy (TICAS): "Students should consider other schools if a school requires them to take out a private loan."

      So, if you want to take out a 7% loan to get a $2400 Nanodegree on Udacity, Pauline wants to stop you; she wants you to put that on your credit card at 20% or, "better" yet, spend tens of thousands of dollars and waste several years of your life at the kind of institutions she is in bed with. And she probably thinks that she is doing you some good by forcing you to do this.

      This is a textbook example of why costs in the US educational system are spiraling out of control:

      Well duh. You give out free money the cost of goods go up!

      Same with healthcare. The more laws you put down where anyone can make money and be required by law to pay you no shit the CEO's are going to jerk up prices to the sky. Insulin that used to cost $45 a shot in 2001 is now $3000! Why? Well why not free money right?

      Car insurance used to be dirt cheap before it was required law. Now the federal government guarantees you can't loose money and wall street brokers will sell your debt for a gain so people ra

      • Well duh. You give out free money the cost of goods go up!

        Unfortunately, it doesn't seem to be obvious to the voters who keep voting for the crony capitalists that support such laws.

  • This kind of behavior should not surprise people (Score:4, Insightful)

    by Sqreater ( 895148 ) on Sunday September 04, 2016 @02:57PM (#52825605)
    The education industry part of the macro-parasite (comprised of government, finance, and business - and which has as one goal: the gathering to itself of all the assets of the mass of people), has identified and targeted the college education as an asset of the mass due to the increase of future earnings that can be expected with a college degree. I've read that increase in future earnings can be a million dollars over a lifetime. Universities and businesses want that money and they will engage in any immoral or illegal activity they have to in order to get it. Tuitions continue to rise in a time of low inflation and low interest rates. There is now over a trillion dollars in student loan debt. That is more than all credit card debt. The mass is being preyed upon with an avidity and efficiency never before seen by man.

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