More often than not, eager graduates, hopeful of beginning an entrepreneurial journey upon obtaining their diplomas, leave college only to be bridled by financial anxiety as they navigate finding a job and paying off surmounting student debt. Our nation is facing a colossal student debt crisis exceeding $1.4 trillion and growing $2,726 every second and over sixty-eight percent of college grads are drowning in monthly payments that average more than $300 a month. This excessive financial burden, combined with the standard hurdles the startup world presents, could be significantly stifling our nation’s entrepreneurial growth.
Student Loan Debt Hinders Startup Dreams
While many challenges associated with launching a company, such as hefty upfront expenses, exist regardless of an entrepreneur's age, the obstacles become even mightier when compounded by crippling student loan debt. These financial barriers have resulted in millennials becoming the least entrepreneurial generation. In fact, nearly half of the millennials surveyed by Monster.com cited “insufficient financial means as keeping them from entrepreneurship.”
With the United States being regarded as the leading global startup hub, fostering our young entrepreneurs should be of the utmost importance. The American dream touts that hard work, determination and a college education can lead you to success. However, with the cost of tuition consistently on the rise, the price tag for higher education could be derailing many millennials’ plans to start a business after graduation. As cash flow and capital are usually the biggest factors for initial success in the startup community, the weight of student debt can make it nearly impossible for the next generation of entrepreneurs to get their businesses up and running.
Graduates Embrace Tech To Pay Off Student Debt
With these barriers in mind, several startups have made it their mission to create platforms to connect college grads with resources to help them master student debt and move on with their lives. Some companies are getting creative and offering solutions that feel really accessible...and fun... like crowdfunding through trivia games and saving spare change.
Here are three companies making moves to decimate the debt problem:
Millennials now account for the largest generation in the U.S. workforce, and businesses are finding it more important than ever to offer incentives that ensure they remain competitive, retain their best employees and attract the most promising new talent. With the shift in the average age of the American worker, priorities for desired benefits are also changing from retirement plans to student loan debt assistance. In an effort to provide more relevant and competitive benefits, Tuition.io enables employers to offer student loan repayment options as part of their company’s benefits. The startup has already signed on notable clients including Chegg, Fidelity Investments and PricewaterhouseCoopers.
Social Finance Inc. (SoFi) is an alternative lending firm, which offers student loan refinancing solutions in addition to a variety of finance management tools and career resources. SoFi allows members to view and manage student loans in a streamlined, central interface and differentiates itself by offering services such as career advice and networking events and engages its members on a more personal, social level.
Though there are a plethora of online tools and apps available to help graduates manage debt, one is taking an especially fun approach and combining finance management tools and resources with a chance to win a lump sum payment to reduce or eliminate outstanding loans. The newly launched Student Loan Club empowers individuals to take charge of their lives and financial situations by providing members with quality resources including refinancing tools, loan calculators, resume assistance, professional HR counseling and industry news. Also, the site allows individuals to enroll in weekly sweepstakes with a chance of winning $5,000 to be applied directly to their student loans. Student Loan Club dedicates the majority of its revenue and one hundred percent of donations towards loan repayments.
With innovation and business growth more important than ever to evolving the U.S. market, it’s increasingly important to support young entrepreneurs wishing to pursue startup ventures. With emerging companies like those highlighted above, I am hopeful we will see the entrepreneurial spirit of millennials continue to blossom.