Is there a new government plan for student loans?
Someone was telling me that there is a new government plan under the Obama administration that allows people that still owe student loans to pay only the principal and NOT the interest.
Is this true and if so where can I learn more about it?
Thanks
No, that’s not true, and I can’t imagine any possible scenario in which it would become true.
Interest is the lender’s profit for making the loan – take away the borrower’s responsibility to pay the interest, and the lender actually loses money making loans. Not only is that an impossible model for banks that have already suffered significant financial losses – it also completely eliminates the hope that investors would give money TO the banks to make loans with. No one (not even the government or the TARP program) gives money to banks out of the kindness of their hearts.
Money is injected INTO the banking system in order to make money.
The information that you have heard is incorrect. There is certainly no such plan in place now, and I can’t imagine a financial scenario in which any such plan would make sense.
I’m sorry for the disappointing news.
