Student Debt Solution: Govt EDU Bank Bonds, At-Cost to Student

In a Facebook discussion about student debt forgiveness, I wondered if, instead of the US government just forgiving debt of student loans, and instead of the students just getting out of paying their loans, and instead of banks getting absurd profits from students, what if the government issued a special kind of education bond, payable to the bank at the end of the borrowed-sum repayment?

1. Student applies for ‘education bond’ to pay for college and with enrollment proof/etc.

2. Bank pays the money required for college to the college, and files the borrowed-amount sum to the government.

3. Student pays bank only the borrowed-sum amount, no interest, gradually to actual borrowed total.

4. Student files with government that borrowed total is completely paid. Student and bank could perhaps get tax incentive for being in a education-bond contract.

5. Bank receives government request for acknowledgement that loan is paid.

6. Bank agrees, and government gives bank the bond amount’s interest (interest only, not borrowed sum) contingent that loan requirements are ended.

Funding for the interest-only payment from government to bank could come from programs like state lotteries, or continuation of the student tax incentives from Step 4 by the student paying back the government via itemized deductions.

Colleges could be taxed or penalized for not offering/accepting the bonds, or given tax-incentives for fundraising for the program via fraternity/sorority volunteering (with a nationwide competition for fundraising for the program) that could draw huge publicity to the college.

Could help create a new educational sector of banking jobs that focus only on these bonds, as safer investment opportunity for investors.

Other brainstorming ideas, or variations? Please add in the comments below (no registration required) =)

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