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Utah Business

Owing thousands of dollars in student debt is killing the entrepreneurial spirit.

Student Debt Is Stunting Entrepreneurship

In 2018, nearly 2 million Americans went to college to get their Bachelor’s degree and over 200,000 worked toward a Masters of Business Administration (or MBA). In 2000, 29.8 percent of Americans held a Bachelor’s degree and 10.4 percent a Master’s. In 2018, 48.2 percent had a Bachelor’s degree while 21 percent held a Master’s. These days, the number of Americans getting a college degree is higher than ever before. 

This drastic increase of American citizens earning degrees was made possible by a greater availability to student loans. But student debt is unforgiving. Student debt loom over graduates and can present a massive setback to those who want to start their own business and be their own bosses. On average, American students own $37,000 in student debt. No wonder it isn’t easy to start a business.  

Student Debt Is Setting Young Entrepreneurs Back

Across the nation, student loan debt has surpassed $1.56 trillion with thousands of Americans responsible for the debt. This rising debt across the country is likely to be part of the reason the percentage of people under 30 who own their own business is 65 percent lower than it was in the 1980s.

What’s ironic is that the millennial generation is all about startups. If you ask any young entrepreneur on the street if they’d like to start their own business, 60 percent of them will say yes, but only 2 percent of those surveyed are actually self-employed. That’s because these ex-students are grinding away to make their monthly student loan payment instead of funding their own businesses. It doesn’t take an economist to see that student debt is stunting the growth of the entrepreneurial industry. 

So the question remains: What can be done?

For some, it’s important to remember that it is totally okay to work for someone else before living out the dream of your own business. Paying off student debt―along with any other debt― is more manageable with a steady paycheck.

Bradley B. Bertoch, president of, suggests the same idea, “sometimes, experience can outweigh college education. Get out there and learn what you need to while working for someone else. Plus, it can help pay off debt. A good entrepreneur will figure it out and with it, gain valuable experience that will help them start their own company.”

At the same time, Mr. Bertoch also believes these institutions need to start thinking outside the box. “There’s no right answer, but I believe everything is an investment. A student just invested tens of thousands of dollars on an education and can’t afford to jump into their own business,” he says. “Now, what if those institutions turned around and invested in the student’s business–take a piece of it? These colleges could grow with what the student builds and get a return on their investment.”

Consolidate Your Loans

Large amounts of debt usually mean high-interest rates, which, for some, can result in minimum monthly payments. This essentially puts students paying off their student debt in 20 to 30 years. It’s even worse if the student owes money to multiple institutions.

If possible, those with debt should consolidate their loans so they are only making one payment a month. If you can afford it, pay a little extra every month, or pay twice a month. More increments here and there make it easier to climb out of debt quicker.

Make Automatic Payments

On top of paying just a bit more every month, you should consider making automatic payments. Many lenders offer a slight interest fee reduction if you have recurring payments. This generally ranges from .25 percent to .50 percent, but every little bit helps. 

Partner Up

In the entrepreneurial industry, this word carries a sort of ominous connotation to it. Partnering up with somebody when starting their own business carries a lot of risks with it. For example, who would front the money, what happens if you sell, or what do you do if your partner exploits the company for their own gain?

Sure, you might hear these stories from time to time, but it’s rare. The fact is, if you have student debt, you might want to consider looking for a partner who doesn’t have any remaining loans. 

If you have a solid plan for starting your own company, one that is poised to succeed, at least on paper, a partnership could help. Their credit will make it easier to obtain loans and get started. 

It’s not all doom and gloom with millennials, student debt, and the startup industry. Gates and Zuckerberg started as employees somewhere else. Often, the idea of starting your own company germinates in an office boardroom during a 4:30 PM meeting. 

2015 and 2016 were one of the strongest years in this century for job and wage growth, which means students are finding opportunities to pay off debt sooner. Plus, the number of entrepreneurship classes in colleges around the country have increased by a factor of 20 since 1985. People are ready, sifting through ideas of their own, determined to become their own boss and call the shots. Student debt may be a detour but it’s something that can be overcome.