Student Loan Debt and Your Startup Dreams

Student Loan Debt and Your Startup Dreams

At 25, I have a peer group that is constantly plagued by the problem of money.  Many are spending large portions of their paychecks on paying off student debt. And this isn’t just a problem among my friends. “Student loans are rapidly expanding past the $1 trillion mark in total outstanding balances”(

I had a conversation with one of my closest friends about how she would love to start a socially conscious business, but with money as a constant concern, she didn’t see it as a possibility. Turns out, “the single largest inhibitor to entrepreneurship is the student loan” says Vivek Wadhwa, a fellow at Stanford University Law School (

Millennials and Student Loan Debt

This is a huge problem for the Millennial generation. Jamie Gutfreund is the chief strategy officer for the Intelligence Group and she says, “Millennials are, in essence, ‘venture consumers,’ Gutfreund says. They’re not looking to fill a slot in a faceless company, any more than a good venture capitalist is looking to toss money at a faceless startup. They’re looking strategically at opportunities to invest in a place where they can make a difference, preferably a place that itself makes a difference”(

People with passion, motivation, and a concern for making a difference in the world, are weighed down with as high as $500-per-month payments on student-loan debt. The result? “Many would-be entrepreneurs simply turn away from starting up in favor of a steady paycheck — especially considering that in the early days of starting a company revenues can be slim, if present at all”(

With student debt bogging down Millennials from starting their own social enterprises, the argument can be made that a much larger impact is possible if student debt wasn’t such an issue.

Student Startup Plan America

Some options exist for those with student debt who want to start their own businesses. The Student Startup Plan America is a Federal program directed specifically at college graduates who are looking to start a business, join a startup, or work in a public service job. The Student Startup Plan America helps make student loans affordable with the Income-Based Repayment (IBR) Plan. The IBR uses a sliding scale to determine how much you can afford to pay on your Federal loans and after 20 years of payments, if you still have debt, you can participate in the Student-loan Forgiveness Program.

There are two problems with the Student Startup Plan America:

  1. It only applies to Federal loans.
  2. It begins to solve a symptom of the larger problem of the need for young people to take loans out to pay for higher education.

I don’t have a solution, since there are many pieces that contribute to the larger picture. Perhaps something like New York City’s Mayor Bill de Blasio’s plan to increase taxes on people with an income of over $500,000 to help pay for education programs (

The Possibilities Could Be Endless

The Millennial Generation has been labeled as “civic-minded” and “optimistic” with “49% of Millennials saying the country’s best years are ahead though they’re the first in the modern era to have higher levels of student loan debt and unemployment”( Millennials are concerned for making a difference in their jobs and in their lives, and they were raised in an era of innovation and technology.

If only there wasn’t this big black cloud of student loan debt, maybe we could really make this world a better place.

Written by Janneke J. Lang

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