Student loan debt in the United States has been growing steadily for several months. At the same time, the housing market has been sputtering, to the point that federal agencies have recently taken measures to reactivate it by loosening lending standards. Now New York City investment management firm BlackRock has a novel idea that it says could help on both fronts: forgiving student debt to first-time homebuyers.
According to CNN Money, student loan debt totals $1.2 trillion, much of that in the hands of Millennials, who are increasingly waiting to purchase homes. The degree to which student debt is the cause of that delay is a matter of dispute among analysts. In a report, BlackRock estimates that about 7 million Americans would be eligible for Federal Housing Administration loans if not for the debt they still carry from their college days.
For people in their twenties, student loans represent 36.8 percent of their personal debt, up from just 12.9 percent in 2005, compared to 42.9 percent for mortgage debt, down from 63.2. Because the government issues most student loans, a policy change like BlackRock's would have to be approved by Congress.
"I commend them for offering an idea, but wonder whether it might be met with some skepticism by the average person (or elected officials) simply because it is coming from what people perceive to be 'Wall Street,'" wrote Ameriprise Financial senior economist Russell Price in an email to CNN Money.
Personal loan software helps users navigate the changing landscapes of mortgage and student lending, accounting for borrowers' debt levels to set ideal loan terms and ensure timely repayments.