BlackRocks Plan to Have Millennials Convert Student Loan Debt into Home Mortgages Just Might Work

I like this kind of out-of-the-box thinking by a company that would love to get the fees that this transaction would start.

"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, wrote in a recent commentary.

BlackRock estimates there are about seven million people in the U.S. that would be eligible for an FHA-approved mortgage but are burdened by student loans. The thinking is that because they are devoting a large chunk of their income to pay down student debt, they probably aren't saving for a down payment on a house. 

If just one million of them are converted to homebuyers through some form of student debt forgiveness, more than three million jobs could be created, Rieder recently told CNNMoney.

You get to convert worthless debt into productive debt and you let millennial contribute that much more to the economy once they are home owners. They get that mortgage deduction and can get off the rental treadmill and actually build some equity.

It would be kind of a GI Bill for people with lots of college loan debt. Maybe the government could also back some loans at below market rates for first time loan buyers for people that were able to pay for college so they won't get left out. In any case this would be an interesting bipartisan bill because it will reduce debt, forgive crushing student loans, might pay for itself and create jobs.