Entrepreneurs know they’re going to have to dip into their own bank accounts when it comes to building up a business. That’s just the nature of the beast Ã¢â‚¬â€œ you have to spend money to make money. But for those fresh out of college, starting a business out of your own pocket can be extraordinarily difficult due to the burden of student loans. $250-$500 you could be injecting into your surefire business idea every month is instead sent to Sallie Mae or the government to pay back the money that was necessary to get your degree. Strategies based around such cost-savers as prepaid cell phones and an office in the cloud are smart, but rarely are they enough to offset the drain student loans have on your available capital.
Fans of free enterprise are usually unwelcoming of news of new government mandates, but recent proposals put forth by President Obama that can help recently graduated entrepreneurs are not meant to infringe upon the free market. Instead, they’re geared toward helping graduates lead more fulfilling lives by reducing the maximum repayment cap on income-based federal student loans to 10% of discretionary income. Discretionary income is the sum total after things such as rent and utilities are removed from the equation. Obama wants this to take effect starting next year, an edit to the original provision passed by Congress that lowered the repayment cap to 15%, which was written to effect in 2014, not 2012.
Ã¢â‚¬Å“Pay-as-you-earnÃ¢â‚¬Â is not a new concept in the world of student loans. In fact it’s been a standard practice in nations such as the United Kingdom for years. While allowing the government to essentially cover the leftover bill once 20 years of faithful lowered payments sounds particular unAmerican to ears used to hearing the sweet sounds of independently-won success, such sorts of success are becoming less and less of a likely possibility for recent graduates suffering under massive student loan debt. The average debt accrued from a four-year education is in the $25,000 range. But some people could be having to pay back as much as $60,000 or $75,000 just for a four-year degree. Who, with the exception of the most fortunate and ultra-brilliant among us, can afford to start a business right out of college, or take out a business loan, when we already owe this amount of money?
You might not be a fan of this President, or the idea that the government should step in and help those who borrowed more than they can pay back. But you certainly can’t argue with the idea that those who attended college right before, during, or immediately after the global economic meltdown were given a bad break. If you disagree, stop and really let that next student loan statement figure sink in. Think about how much you could do with even just an extra $100 at the end of every month. You could star a business with that kind of scratch.
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