As graduation season approaches, SBA Chief Karen Mills thinks you should consider entrepreneurship.
For recent grads who may not have a job waiting on the other end of that diploma, entrepreneurship offers a number of benefits — not least of which involves a chance to erase some of your student-loan debt. Starting this year, young entrepreneurs can take advantage of the Income-Based Repayment (IBR) Plan, which supports young college students that are looking to start a business, join a startup or work in the public service by making Federal student loan repayment manageable.
President Barack Obama first announced the student loan-forgiveness program in October of last year. Under the plan, borrowers’ payments would be capped at 10 percent of their discretionary income — that is a person’s income after accounting for other living costs. The new measures would also shorten the forgiveness timeline to 20 years from 25 years. So, if someone had $100,000 of federal loans and earned an annual salary of $30,000, that person’s monthly payment might amount to $1,150. Through the program, that borrower would pay just $116 a month, and, after 20 years, the leftover debt would be forgiven.
“By using a sliding scale to determine how much you can afford to pay on your Federal loans,” says Mills of the U.S. Small Business Administration, the IBR program is “empowering [young people] to take risks with new opportunities like starting a small business.”
If you still have more questions about the program — and it’s likely you will as recent stats show that student loan debt outpaces credit card debt these days — check out this story from Entrepreneur.com “White House Alleviates Student Loans for Entrepreneurs.” But also send in your questions to Mills and the U.S. Department of Education Secretary Arne Duncan. They’re hosting a Twitter Q&A today at 2pm EST. Submit your questions and follow the conversation on Twitter using the hashtag #GradStartup.
Would student loan-easing options help you start up? Leave a comment and let us know.