Young Entrepreneurs Can Lower Student Loan Payments to Start a Business or Join a Startup
by esrobins, SBA Official
- Created: October 26, 2011, 3:06 pm
- Updated: October 26, 2011, 3:20 pm
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.
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