I counsel small business owners on a daily basis. And I‘ve seen firsthand how America‘s $1.7 trillion student debt crisis stands in entrepreneurs‘ way. Exorbitant loan balances make it harder for them to get the financing they need to launch companies and reach profitability. This threatens innovation, job creation, and overall economic growth.
These statistics demonstrate why resolving this crisis is imperative—not just for borrowers, but for our nation‘s economic health.
By Degree Type
- Bachelor‘s degrees: Average debt of $29,900
- Master‘s degrees: Average debt of $71,000
- Professional degrees: Average debt of $141,000
Aspiring entrepreneurs often pursue advanced degrees to gain needed credentials. But staggering balances then obstruct their ability to acquire capital and scale fledgling ventures.
By Institution Sector
- Public colleges: $27,000 average debt
- Non-profit private colleges: $33,800 average debt
- For-profit colleges: $43,900 average debt
For-profits often burden students with exorbitant loan balances despite poor job prospects post-graduation. This creates an added obstacle for their entrepreneurial dreams.
Student Debt vs. Other Forms of Household Debt
- Total U.S. student debt: $1.7 trillion
- Total U.S. auto loan debt: $1.4 trillion
- Total U.S. credit card debt: $890 billion
Student debt is the highest source of household debt after mortgages. This depresses borrowers‘ ability to make other purchases that stimulate growth.
Long-Term Impacts
Surveys reveal that student debt:
- Delays 72% of borrowers from starting a business
- Prevents 89% from buying a home
- Leads 65% to put off furthering their education
High monthly burdens also make it hard for borrowers to invest in expansion plans. One of my clients waited years before he felt financially secure enough to open a second location.
Potential Solutions
Targeted debt forgiveness programs can help neutralize loans as a barrier to business ownership. Income-driven plans also need reforming to fit entrepreneurs‘ more fluid earnings.
This crisis obstructs innovation and talent cultivation nationwide. But by advocating for borrowers, we can effect meaningful change. The health of America‘s startups depends on it.
