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Young Entrepreneurs Can Lower Student Loan Payments to Start a Business or Join a Startup

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Young Entrepreneurs Can Lower Student Loan Payments to Start a Business or Join a Startup

Published: October 26, 2011 Updated: October 26, 2011

By Sean Greene, Associate Administrator for Investment and Special Advisor for Innovation

Yesterday, the President announced how we’re reducing the burden of student loan debt for college graduates and their families.  As a former entrepreneur, I know just how important debt relief is in helping finance extra months of operating runway that a new businessneeds to get up and running.

It’s particularly important that we give as much “breathing room” as possible to entrepreneurs who have both a degree and a great business idea that has the potential to increase America’s competitiveness, create jobs, and change the world.

That’s why – today – the SBA launched a new page on SBA.gov called the Student Startup Plan.  We heard over and over again from the Startup America: Reducing Barriers roundtables that entrepreneurs need greater financial flexibility to take the risk and start their own venture.  This new page  draws attention to an underutilized tool for tomorrow’s entrepreneurs: Income-Based Repayment (IBR). 

IBR is a unique program that allows many student-loan borrowers – especially those with lower incomes and/or families of their own – to make lower payments on their student loan bills.  It uses a sliding scale to determine how much you can reasonably pay.  This tool can be used for recent graduates who are trying to start a business, as well as those who are looking to join a startup company that might not offer a good salary until the company becomes more profitable.  This can help in situations where a startup offers a new employee equity as a form of compensation, which is attractive in the long-term but doesn’t address the immediate needs to start paying back those loans.  You might also qualify if you’re a not-so-recent graduate who started your own business and you’ve seen a drop in income as a result.

Check out this quick and easy IBR calculator which can give you an idea of how much this could save you in monthly payments. 

Overall, the goal is to empower you to go ahead and take a calculated risk to turn a solid business plan into a reality.  While deferring loan payments isn’t right for everyone, I think that deferring a big entrepreneurial opportunity can be an even bigger mistake for many dynamic young Americans with marketable ideas.

Interested in learning more about how the SBA helps young entrepreneurs?  Check out www.sba.gov/youngentrepreneurs and stay tuned for youth entrepreneurship events happening around the country starting in November.

About the Author:

Sean Greene
Sean Greene is the Associate Administrator for Investment and the Special Advisor for Innovation at the U.S. Small Business Administration.

Comments:

Thanks for sharing these info with us! I was reading something similar on another website that i was researching. I will be sure to look around more.
Thats a great move because in this country right now, a lot of people hold student loans. Its one of the biggest "types" of debt we carry right now.
I think this is a fantastic program for young entrepreneurs. I just wish they had this when I launched my company!
Very impressed by this announcement and I would like to see as many young people as possible taking advantage of this.
Now this is a fantastic idea and real bonus for young people. I haven't seen any other countries adopting this and this policy can only put the US ahead of the field.
What requirements do students have in order to apply for a loan discount?
That's really great news, but what about not-so-young students? I mean I'm a student, but I'm not young, can I expect the same benefits?
thanks for the great info
This is great news and definitely an incentive to create a business at a younger age. But with today's unwilling consumers will it be enough to force a positive stream? fruitautomaten
Anything you write, even if you have to start over, is valuable. I let the story write itself through the characters. Nawshad

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