It’s no secret that the US is $1.2 trillion in student loan debt. One Wall Street firm has put an interesting offer on the table. It’s bold and definitely turning heads. BlackRock suggested that government simply forgive student debt of many millennials to stimulate the economy and housing market. . BlackRock alleges that the debt is the reason young adults aren’t jumping into the housing market.
It’s no secret that the US is $1.2 trillion in student loan debt. BlackRock suggests that the debt is the reason young adults aren’t jumping into the housing market.
The logic is clear, seeing as many people in their late twenties and early thirties are plagued with high student loan repayment plans and are opting to live in their parents’ home longer.
“Fiscal policy initiatives targeted at young workers with high levels of student indebtedness might, perhaps surprisingly to some, have an outsize impact in supporting the housing recovery and financial markets,” Rick Rieder, co-head of Americas Fixed Income at BlackRock, recently stated.
Part of the theory is that for as many converted homebuyers come out of this group; it will create about three times as many jobs. While the debt forgiveness would be an initial hit to the government financially, the increase in jobs would generate more tax revenue.
While at the moment there isn’t any way to be a 100 percent certain that this plan would be effective, there are statistics that support the theory. For example, in 2005 when only about 13 percent of the population had a student loan, approximately 63 percent of the people in their twenties had a mortgage. Now in 2014, the percentage of people in their twenties with mortgage debt has decreased as the percentage of this age group with school loan debt has increased.