09242017Headline:

Student loans are the reason Millennials are not launching startups

By Isadora Linheira

 

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Student loans have become a lifeline for many prospective students to pursue their dreams of going to college, and to some people the only way to become the first person in the family to attend college.

According to a recent article in The Wall Street Journal, student loans increased to more than $1 trillion since 1999. Other consumer debt such as car loans, credit cards, and mortgages have dipped, while student debt has doubled to $547 billion since 2007.

Young people, especially recent graduates, are more likely to start their own small business and have the initiative to
launch startups. However, according to research, Millennials are no longer following that path due to this debt.

Still, according to The Wall Street Journal, the explanation of such patterns is simple: entrepreneurs borrow money, but the average student loan customer already owes $28,000, which means that those enterprising adults are in debt even years after graduation. Startups usually depend on loans and credit; however, due to their debt, most of these
entrepreneurs are not able to apply for other loans.

The expectation of debt leads to less graduates trying for risky jobs or trying to start their own business. Instead, they are forced to join an already stable company and become an employee instead of a possible employer in order to secure stable finances – enough topay for their student loans.

Student loans are a facilitator for members of every community, regardless of income, to earn a degree. Unfortunately, the economy is being adversely affected by the lack of Millennials launching startups, which generate six in ten new jobs. Recent research by The Kauffman Foundation has reported that new entrepreneurs in the age range of 20 to 34 fell to 23 percent of self-starters in 2013 – down from 35 percent in 1996.

Student loans may well be creating a national imbalance by rising national debt and flooding a weak job market with desirable candidates, while offering only half as many jobs as a few years ago. Until higher education is made affordable for all, a weak economy and possible recession will always be real possibilities.

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