WASHINGTON — A proposal from an Ohio legislator aims to help make millennials homeowners at the same time as they pay off student loan debt.
Congresswoman Marcy Kaptur wants to create a pilot program in Ohio, which could eventually become a model for the rest of the nation.
Student loan debt is a growing problem, and now totals $1.3 trillion. Meanwhile, as many as 17 million homes sit vacant across the country–something Kaptur said is correlated.
“Student loan debt is prohibiting millions and millions from buying their first home,” Kaptur said.
Kaptur wants to start a program that merges student loans and mortgages. She said the program would start with college graduates who have good credit, and have been making their student loan payments on time.
“Those are the ones we’re going to focus on first, because we want the program to be successful,” Kaptur said.
Kaptur said the program would encourage homeownership, and may even help cities strengthen neighborhoods suffering from high rates of foreclosure or vacancy. The program could potentially offer graduates a better interest rate on their student loans as well.
But Justin Draeger of the National Association of Student Financial Aid Administrators said interest rates are not the only factor borrowers should consider.
“There are so many considerations when you’re talking about these types of trade offs, Draeger said. “For example, there are build in protection in the federal student loan programs that might not exist in a mortgage.”
Draeger said that as student debt continues to mount, lawmakers should look for more innovative options.
But Kaptur said she hopes her state can be an example of how such a program can work, and she is taking the necessary steps to see that to fruition.
The congresswoman is putting together a working group in Ohio that includes local housing organizations, nonprofits and other local stakeholders to move closer to making the project a reality.