The Federal Reserve Bank of New York  recently reported that student loan debt had increased by $21 billion in Q4 2017. U.S. student debt currently totals  around $1.4 trillion, with the average student in 2017 owing $37,172. Student loan debt is an obstacle that hampers many Americans trying to build a financially stable life and career, whether it’s preventing debt holders from paying their bills, stockpiling retirement savings, or even acquiring a home. But one Pennsylvania lawmaker has an outside-the-box solution to the home part of that equation: zero-interest mortgages to help fight student debt.
As reported by The Legal Intelligencer , State Rep. Jake Wheatley Jr. (D-Allegheny) has announced he will be proposing legislation designed to both combat student loan debt and help those buried under that debt become homeowners. Wheatley’s proposed legislation would allow individuals with student loan debt to acquire “a zero-interest mortgage rate to be used against the buyer’s student loan debt” if they purchase a home through the Pennsylvania Housing Finance Agency’s  (PHFA) real-estate owned portfolio.
According to the agency’s website, the PHFA “works to provide affordable homeownership and rental apartment options for senior adults, low- and moderate-income families, and people with special housing needs,” as well as promoting economic development within the state of Pennsylvania. Since its creation in 1972, the PHFA has generated more than $13.5 billion of funding for nearly 170,935 single-family home mortgage loans and saved the homes of more than 49,150 families from foreclosure.
Rep. Wheatley  says that the zero-interest mortgages would be provided by the PHFA, which would, in turn, receive revenue from the sale of the home. According to Rep. Wheatley, this would cost the state nothing.
If the legislation were to pass, the program would likely find no shortage of interested applicants. According to an April 2017 report by the Pennsylvania Independent Fiscal Office , Pennsylvania ranks second in the nation for highest amounts of student debt, with college graduates in the state owing an average of $34,798.
In August 2017, the Consumer Financial Protection Bureau reported that  nearly half of school borrowers are bogged down with at least $20,000 of student debt—double what it was 10 years ago. Also last summer, the Fed released a study  showing that as much as 35 percent of the decline in young American homeownership from 2007 to 2015 was due to the higher student debt loads. With many homeowners already having to navigate increasing prices and limited availability, finding ways to address the student debt crisis could be key to getting more people into homes and out of the rental market.