Millennial Entrepreneurs: 5 Tips to Ensure Student Debt Doesn’t Hold You Back
There are a number of ways in which you can manage your student loans effectively and make your entrepreneurial dreams come true.
Shutterstock
Opinions expressed by Entrepreneur contributors are their own.
Many millennials are graduating college with dreams of opening their own businesses. But as they leave campus with their degrees in tow, they are also carrying with them significant amounts of student debt — a burdon that could squash their entrepreneurial dreams.
The Kaufmann Foundation recently found that the number of millennial-owned businesses declined as the average student debt soared. In 1996, young people were the age group most likely to launch a business, but they’re now the group that is least like to do so.
Related: How I Went From $40,000 in Debt to a Millionaire by Age 30
LendEDU1. Get a handle on your debt
2. Change your repayment plan
It makes sense for entrepreneurs to choose one of the income-based repayment options available on their federal loans, because these plans cap your payments to just 10 percent to 20 percent of your total discretionary income.
During the first few years of starting a business, entrepreneurs often make very little income. Ensuring that your student loan payments are affordable no matter how little you make, will mean that you will be significantly less stressed about money.
Related: Why You Should Care About Student Loan Debt
3. Refinance your debt
Refinancing your debt will just allow you to potentially get a much lower interest rate on your student loans.It could also allow you to change the term length of your loans and therefore reduce the amount that you have to pay each month. The downside is that you will end up paying more in interest over the life of your loan.
One challenge you might face is qualifying to refinance your student debt while you’re an entrepreneur. In general, our research shows that 57 percent of refinancing applicants are approved.
you will lose access4. Pay a bit more when you can
If you’re taking advantage of an income-based repayment plan, your monthly payment could end up being less than the amount that you’re being charged in interest every month. That means that every month your student loan debt will increase. In that case, you might want to pay a little extra to cover your student loan interest.
Related: 5 Reasons Paying Down Debt Is a Critical First Step for New Entrepreneurs5. Have an emergency fund
emergency fund
While it might seem difficult to juggle both your student loan repayment and starting a business, it’s not impossible. Luckily, there are a number of ways in which you can manage your student loans effectively and make your entrepreneurial dreams come true.
Many millennials are graduating college with dreams of opening their own businesses. But as they leave campus with their degrees in tow, they are also carrying with them significant amounts of student debt — a burdon that could squash their entrepreneurial dreams.
The Kaufmann Foundation recently found that the number of millennial-owned businesses declined as the average student debt soared. In 1996, young people were the age group most likely to launch a business, but they’re now the group that is least like to do so.
Related: How I Went From $40,000 in Debt to a Millionaire by Age 30
LendEDU1. Get a handle on your debt
2. Change your repayment plan
It makes sense for entrepreneurs to choose one of the income-based repayment options available on their federal loans, because these plans cap your payments to just 10 percent to 20 percent of your total discretionary income.
The rest of this article is locked.
Join Entrepreneur+ today for access.
Subscribe Now
Already have an account? Sign In
