Good morning,
Erika Kullberg did everything right.
In 2015, during her third year at Georgetown Law, she and classmate Jimmy McNamara founded ReferU, which added a social dimension to the referral of new tenants for apartment buildings. She researched the industry, scored big meetings, landed a prominent mentor, hired interns, spoke with angel investors--the whole nine yards. A year later, an international law firm offered her a lucrative job. Her heart said to pursue the startup. Her $200,000 in student-loan debt said otherwise, so she and McNamara reluctantly shuttered their fledgling business.
After the pandemic knocked the wind out of the economy, recovery plans focused mainly on saving existing small businesses rather than breathing life into new ones. Yet entrepreneurship is critical to the job creation and innovation needed for economic recovery, and as Kullberg’s experience indicates, student debt is a major barrier for many founders. The U.S.’s collective student debt now stands at around $1.7 trillion, up from $521 billion at the end of 2006, according to the Federal Reserve. That burden is spread across close to 45 million adults, with three-fourths of the graduates from private, nonprofit schools holding an average debt of more than $32,000.
Student debt makes bootstrapping a startup significantly harder. It affects a founder’s credit score. It renders more daunting the prospect of failure, which increases risk aversion--keeping founders from taking big swings and reaping big rewards.
Read our story to learn how the student debt crisis has blunted the ambition of U.S. entrepreneurs, and what can be done to solve the problem. |
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