How Student Loan Debt Impacts Entrepreneurship, According To Business Leaders

Cindy Apt

The effects of student loan debt on young adults are often reported in terms of delayed traditional “life milestones”–for example, achieving financial independence, purchasing a home, getting married or starting a family. Less commonly reported, however, is the impact student loan debt has on entrepreneurship.

Starting and growing a business requires a significant financial investment, a task made more difficult when accounting for monthly loan payments. Below, 13 members of Forbes Business Council shared their insights on how student loan debt can affect an entrepreneur’s journey.

1. Job Market And Economic Considerations

I studied abroad; however, I do feel that as long as the job market and economy are strong where you work and start ventures, the payoff should not be an issue or stress. It’s more of an opportunity to increase growth and success. – Marianella Manzur, Joorney Business Plans

2. Increased Focus On Profitability

For me, it always came down to unit economics and profitability. Because I had to make minimum payments on my student loans and didn’t have enough money in savings to put back into the business, the company had to be profitable. I actually think this is a positive situation to be in because it forces you to look at every cent you spend. Being flush with capital too early can be detrimental. – Sarah Kauss, S’well


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3. Less Capital, Higher Stakes

Student loans can have a big impact on entrepreneurship. For one, founders with student loans may be more likely to start their own business, as they have more at stake if the business fails. Additionally, having student loan debt can limit the number of money founders can invest in their businesses. This can impact everything from the type of businesses that are started to how quickly they grow. – Chastity Heyward, Sylvan Learning Center

4. Stronger Motivation To Take Action

Having to repay student loans every month was not a good feeling that made me want to repay them as quickly as I could, so I used repaying the student loans as strong motivation to drive my action toward making my business profitable. Negative feelings create strong motivation to take massive action. – Yuzuru Ishikawa, Globalcube Limited

5. Pressure Of Repayment

The loan amount and due date were stuck in my mind, which didn’t allow me to enjoy my internship days. I have tried my hands with entrepreneurship, which had its own struggles, but receiving the loan amount before the due date gave me relief from my mental pressure. The loan definitely created a good impact; however, studying with a fear of repaying debt isn’t good, especially as a teenager or young adult. – Kiara Streater, Extraordinary Headhunters LLC

6. Increased Importance Of ROI

Student loans are a challenging part of any young entrepreneur’s life. Recurring income is as beneficial as recurring debt is crippling. I was always adamant on ensuring that there would be a discernible ROI attached to whatever degree I received. Therefore, I perceived that my degree would pay for itself in time. Get a degree in an area you will work in if you want the degree to pay for itself. – Johnny Marines, Johnny Marines Enterprises

7. Supports An Investment In The Future

I live in Europe and did not have to take out a student loan. It’s more common in the U.S., not necessarily here in Germany, but if I had to take out a loan for my education and training, it would be worth it to me. I think there’s nothing more meaningful than investing in yourself and your future. – Fabian Siegler, Expertiserocks SL

8. Greater Challenges, Greater Understanding

I think any kind of challenge helps you understand who you are. Personally, I got grants and scholarships to study and it was hard. In my career afterward, that experience helped me understand what I wanted and who I could become. Also, the best universities nowadays are saying that any kind of challenging education program creates very strong entrepreneurs, managers and businesspeople. Alumni statistics confirm that. – Alex Borisov, ROCKETECH

9. Sustainable Investment And Repayment

Debt is rarely a best case scenario but it is something many entrepreneurs manage when starting out. Ensuring you’re investing in your business sustainably while paying off what you need to is essential. At all times, you must have a big picture view of money coming in and money coming out. – Muraly Srinarayanathas, Computek College

10. Personal Financial Sacrifice

When I opened my first small business in 2015, regulatory delays turned a February launch into a September launch, leading to a lot of refunded customers. In the meantime, I racked up personal credit card debt and even sold furniture to make payroll on a few occasions. The funds that went toward my student loan payments could have prevented that. – Dustin Snyder, Wayforward Associates

11. The Mental Block Of Debt

Loan debt is a huge mental block for most. While you are out there working toward your dreams, there are the lingering, nagging thoughts in your brain thinking that unless profit is redeemed immediately and consistently (in order to make payments), you will have to find another way to pay these bills. Having added financial pressure can seriously hamper your creative juices. – Mo Mostashari, AMIBA Consulting

12. Budgeting Considerations

Factoring in student loans as another bill requires running your business well. Incorporate it into your budget and allow this budget to grow as you seek additional education throughout your career. Learning is a continuous process. Your education budget should include continued education for you and your team as you pay off old debts and incur new ones to grow your mind and your business. – Nadir Qazi, DO, Qazi Cosmetic Clinic

13. Increased Desire To Support Others

There is an obvious student loan crisis in the United States. Currently, student loans are hundreds of billions of dollars higher than subprime loans were in 2007. I am grateful that I cash flowed my executive education and have no student loans so I can focus on what matters: Growing a business that will employ people who do have loans to pay regardless of the economy. – Susan Sly, RadiusAI, Inc.

https://www.forbes.com/sites/forbesbusinesscouncil/2022/04/28/how-student-loan-debt-impacts-entrepreneurship-according-to-business-leaders/

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