Let’s face it, Amazon is a very big company that has done a lot of things correctly. We all know that we can visit their web site, pick out something that we want and almost magically it’s going to show up at our door in just a few days. All of this success has put some pressure on the Amazon product managers. They need to keep finding ways to allow the company to keep growing. As product managers we all know what this means – new products. Recently the Amazon product managers decided to expand their product development definition and introduced a new product that was yanked off the market after only a couple of days. What went wrong?
Paying For School
In the world that we live in, going to college is an expensive undertaking. Paying for four years (at least) of schooling, books, lab materials, housing, etc. can all add up. Most students who are just starting out on this journey don’t have enough savings to see them though the entire journey. What this means is that they are going to need to take some loans out now that they’ll hopefully be able to pay back after they get their degree and then go out and get a job.
Students who are looking to find a way to finance their college education generally have two options: federal loans (from the government) and private loans (from a bank). These two types of loans are very different from each other. Federal loans are currently being offered at a historically low interest rate of 3.76% fixed (which means that the interest rate won’t change). However, private loans are generally offered at much higher rates which currently could be as high as 13.74%.
The issue of just exactly how much debt a student is going to emerge from college with is a very important question. Generally speaking, student loans don’t have to be paid back while the student is in school. However, once they leave school (hopefully by graduating) the payments start. Currently students owe US$1.3 trillion (yes, that’s right – trillion) in student loans. More than 90% of that money is in the form of Federal loans. However, that also means that 10% of that very large number is owed to banks.
What Was Wrong With This Product
The issue of crushing students with loans that they will never be able to repay is currently in the news. Into this charged environment the Amazon product managers decided to step. Amazon teamed up with the bank Wells Fargo (you remember, the bank that just got in trouble for signing people up for products that they didn’t want) and planned on offering interest rate discounts on private student loans to qualified members of Amazon’s new “Prime Student” service. Sure sounds like something that could be added to a product manager resume.
Almost as soon as it was announced, this new product offering came under heavy fire. The Institute for College Access & Success (Ticas) is a nonprofit organization that focuses on higher-education as well as student-loan issues. Ticas said that the new Amazon product was an attempt to dupe students who are eligible for federal loans into taking out more costly private loans.
Ticas did more than just voice its objections to the Amazon / Wells Fargo partnership. They took their concerns to Capitol Hill in Washington. There they met with influential senators who are involved in the federal student loan program. These senators then met privately with Amazon and expressed their concern with Amazon using their brand to sell private student loans and that the discount that they were offering could be cancelled or changed at any time. The Amazon product managers got the message and Amazon and Wells Fargo ended up scrapping the product that had taken over a year to create.
What All Of This Means For You
Sometimes even the best sounding product can turn out to be a dud. In the U.S., when a student wants to go to college, it’s going to cost a lot of money. The product managers at Amazon saw an opportunity to create a product that would connect college bound students who use the Amazon service with discounted private college loans. It turns out that despite what they thought their product manager job description said, this was not a good idea.
Almost immediately after Amazon launched their new student loan matching service it started to get negative reviews. It turns out that in the U.S. students can get federal student loans with a very low interest rate. Private student loans are offered by banks and come with a much higher interest rate. Student advocacy groups were concerned that the Amazon brand would be used to steer students into higher priced private loans if they were not aware of the availability of federal student loans. Additionally, the Amazon deal was not all that great because the offered discounts could go away or be changed at any time.
This sure looks like a case where the Amazon product managers had their hearts in the right place, but they didn’t think the product offering through all the way. It turns out that only about 10% of all student loans are private loans and the people who offer these loans are not seen as being nice people. This is clearly one product offering that Amazon should never agreed to deliver!
Question For You: Do you think that Amazon should team up with the U.S. government and try to offer federal college loans?
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What We’ll Be Talking About Next Time
The majority of consumers identify themselves as being meat lovers. What this means is that they like their burgers to be made with a nice juicy piece of meat. For a variety of reasons, this has created a challenge that a number of different product managers are trying to solve. Can they change the burger product development definition and create a burger that looks and tastes like the real thing with one important exception: it does not contain any meat?